Handbook on the Economics of the Internet
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Handbook on the Economics of the Internet

Edited by Johannes M. Bauer and Michael Latzer

As the single most important general purpose technology of recent times, the Internet is transforming the organization, competitive structure and business models of the private, the public and non-profit sectors. In 27 original chapters, leading authors discuss theoretical and applied frameworks for the study of the economics of the Internet and its unique economics as a global information and communications infrastructure. They also examine the effects of the Internet on economic transactions (including social production, advertising, innovation, and intellectual property rights), the economics and management of Internet-based industries (including search, news, entertainment, culture, and virtual worlds), and the effects of the Internet on the economy at large.
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Chapter 17: Internet business strategies

Johann J. Kranz and Arnold Picot


In business and beyond, the Internet has been a – if not the – most influential technological change within the last two decades. It has greatly affected traditional industries at the macro and micro levels. It has also created new markets such as online auctions, online gaming, search engines, social networks, online advertising, and digital marketplaces. In both new and old markets the Internet has changed traditional ways to gain competitive advantage. Many established companies are challenged with the question of how to use the Internet as a complement to or even full transformation of their offline business and capture appropriate value from their Internet activities. ‘Platformization’ is a new phenomenon especially widespread on the Internet. The Internet also enables hybrid competitive strategies beyond cost and differentiation strategies. In this chapter, we particularly focus on the question of how established firms and dot-coms can leverage Internet technologies and do business on the Internet to gain competitive advantage.

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