The International Handbook of Telecommunications Economics, Volume II
Edited by Gary Madden
Chapter 4: Electronic commerce and industrial organization
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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