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Emerging Telecommunications Networks

The International Handbook of Telecommunications Economics, Volume II

Edited by Gary Madden

This major reference work provides a thorough and up-to-date survey and analysis of recent developments in the economics of telecommunications. The Handbook serves both as a source of reference and technical supplement for the field of telecommunications economics.
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Chapter 4: Electronic commerce and industrial organization

Steven Globerman


Steven Globerman INTRODUCTION The emergence and growth of electronic commerce (e-commerce) are seen as momentous developments by many observers, on a par with the industrial revolution in terms of the potential economic consequences. The prospective impact of e-commerce on the industrial organization of product markets has in particular been noted. Specifically, e-commerce is seen as encouraging profound changes in the geographical markets of many products, as well as associated changes in the structural competitiveness of many product markets. This study identifies and evaluates the major potential impacts of e-commerce on industrial organization. In particular, it addresses whether and to what extent geographical distance, and the related costs of transacting over geographical distance, will become substantially less important over time for different sets of producers and consumers. It also considers whether traditional barriers to entry are becoming less important in conditioning the degree and nature of competition in relevant product markets. Further, the potential for new forms of market intermediation to emerge, and traditional forms to disappear, is addressed. The following section provides a brief description of e-commerce, its current status and prospects for the future. Identification and assessment of the main hypotheses linking the growth of e-commerce to changes in organizational characteristics of affected industries are then made. Evidence bearing on the main hypotheses is also evaluated. A discussion of policy implications concludes the study. DESCRIPTION OF E-COMMERCE Definition of E-commerce The term e-commerce is used to describe many uses of modern telecommunications and...

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