The Economics of Electronic Commerce

Chia sẻ: Mille Mille | Ngày: | Loại File: PDF | Số trang:0

0
93
lượt xem
39

The Economics of Electronic Commerce

Mô tả tài liệu

This book is written in the belief that the tenets and teachings of economics are vital to an insightful analysis of the broad spectrum of issues affecting commercial uses of the Internet and the next-generation information infrastructure. Our digital future is being decided on the Internet, where prototypical products and services have been test-driven by an odd collection of individuals. Just a few years ago, commercial uses of this somewhat chaotic and decentralized network of networks seemed highly unrealistic. Today, while the government and large corporations are grappling with proposals on how to build the national information infrastructure, major components of......

Chủ đề:

Bình luận(0)

Lưu

Nội dung Text: The Economics of Electronic Commerce

4. The Economics of Electronic Commerce advanced topics and terms. In addition, we include examples whenever possible to make our discussion more concrete and specific. The online references to these and other related sites and documents found at the end of each chapter will allow readers to further explore these and other examples on their own. Acknowledgments This book is a result of collaboration among the authors but many thanks are due to our colleagues who provided us with interesting materials, read the manuscript and made invaluable suggestions. For their help, we would like to thank John Allison, Valerie Bencivenga, Scott Freeman, Mark Lemley, R. Preston McAfee, David Sibley and Bruce Smith as well as anonymous reviewers. Alok Gupta's collaboration for the section on the infrastructure pricing is specially acknowledged. Susan Kutor suffered most while reading and correcting often incomplete chapters, and we are indebted to her for her suggestions and corrections. We'd also like to thank our editor Thomas Stone, who tirelessly worked to make this project perfected, and Amy Lewis, Tim Micheli and the staff at Macmillan Technical Publishing. Finally, we would like to acknowledge financial support from the Information Technology and Organizations program at the National Science Foundation and the program managers, Drs. Su Shing Chen and Les Gasser, and the support from the Information Technology Program of the State of Texas. © 2003. Choi, Stahl & Whinston P-4
5. The Economics of Electronic Commerce Chapter One: Electronic Commerce and the Internet 1.1. Developments in Inter-networking _____________________________________ 1 Distributed and Networked Computing _________________________________ 2 Open Network ______________________________________________________ 3 Two-way Communications and the Web ________________________________ 7 1.2. What Is Electronic Commerce? _______________________________________ 9 Electronic Commerce Examples _______________________________________ 9 Electronic Commerce as a Communications Network ____________________ 11 Electronic Commerce of Digital Products_______________________________ 12 Commercial Potential of the Internet __________________________________ 15 1.3. Market Characteristics of Electronic Commerce_________________________ 16 Current Commercial Uses of the Internet_______________________________ 17 User Characteristics ________________________________________________ 19 Competition and Market Organization_________________________________ 20 Business Organization and Virtual Firms ______________________________ 22 Legal Environment _________________________________________________ 23 1.4. Current Issues in Electronic Commerce _______________________________ 25 Contents and Quality _______________________________________________ 26 Copyrights vs. Users Rights __________________________________________ 28 Interactive Advertising and the Use of Consumer Information _____________ 30 Internet Intermediaries______________________________________________ 32 Security and Privacy of Internet Transactions___________________________ 33 Pricing Strategies for Digital Products _________________________________ 34 Online Taxation, Regulation and Other Legal Issues _____________________ 35 1.5. Summary ________________________________________________________ 36 References___________________________________________________________ 37 Suggested Readings and Notes __________________________________________ 38 Internet Resources ____________________________________________________ 39 © 2003 Choi, Stahl & Whinston 1-1
6. The Economics of Electronic Commerce Chapter One: Electronic Commerce and the Internet Our objective in this and the next two chapters is to provide you with a framework for understanding the economic impact of the new business medium by defining electronic commerce and the nature of digital products. Opinions regarding the future shape of the Internet and electronic commerce may vary widely, but consensus reigns that commercial uses of the Internet will have an immense effect on businesses, governments, and consumers. The question is, "In exactly what areas and in what ways will they be affected?" A shared definition of electronic commerce is the first step toward presenting the answers. In this chapter, we discuss the characteristics of computing environments that have made the Internet the infrastructure for electronic commerce. In Section 1.1, we present an overview of how computing and networking environments have evolved into the Internet. Our objective is to highlight differences between the Internet and previous computing and communications environments in order to give a clearer understanding of the importance of the Internet as a commercial medium. In section 1.2, we review commercial and non-commercial uses of computing and communication technologies, and define what electronic commerce is within the context of changing technologies. It will be evident that conventional distinctions between commercial and non-commercial uses of the Internet are no longer valid. In Section 1.3, we discuss the market characteristics of electronic commerce, pointing out the differences from traditional physical product markets as well as issues arising from the novice nature of electronic commerce. To wrap up our introduction in Section 1.4, we introduce readers to key issues in electronic commerce and look at how economic analysis may help to resolve many uncertainties. While these snapshots put the issues in perspective, later chapters will deal with each in depth. 1.1. Developments in Inter-networking The Internet is a network of networks. Each network is comprised of computers connected by wire- or wireless medium such as radio signals that enable component computers to "talk" to each other. Once computers are networked, files on one computer can be accessed from any other computer on the network; messages can be exchanged, and limited resources such as printers can be shared. Large or small, each network is owned and managed by a company or a single group with the exception of the Internet. The Internet is not owned or managed by any single entity although its component networks are independent units managed and usually paid for by the network's owners. (We discuss in detail the Internet technology and infrastructure in Chapter 3, Section 3.6; in this chapter, we focus on general characteristics of the Internet as a market infrastructure). Computers on these component networks become a part of the larger © 2003 Choi, Stahl & Whinston 1-1
16. The Economics of Electronic Commerce and countless other business activities. More important than the mere number of areas being affected by electronic commerce is the fact that these activities can be integrated into a holistic business process. Thus, all the areas mentioned above are not really a separate application but rather one aspect of the whole electronic commerce process. For example, inventory and supply management is tied to production as well as to the demand data collected from consumers ordering via Web stores. In short, the business potential of electronic commerce is the ability to innovate and integrate business and market processes. The most obvious and immediate use is achieving transactional efficiency. Electronic Commerce as a Communications Network At the core of traditional electronic commerce is the use of electronic means to expedite commercial transactions and improve efficiencies in business processes and organizations. In this vein, electronic commerce on the Internet means online ordering and payments. The narrowest definition of what electronic commerce is holds that electronic commerce on the Internet is a networked electronic data interchange (EDI) with a more flexible messaging system. Traditional EDI is limited to signals that only computers can read and that correspond to information on electronic forms used in standard business transactions such as ordering, invoicing and shipping. An open EDI using the Internet means that EDI messages may be sent and received via email. In the next level of sophistication, EDI can use electronic forms made available on Web pages for customers to order. This view considers electronic commerce and the use of the Internet as merely improving business and communication, especially in business-to- business transactions. Accordingly, issues in doing business on the Internet are mainly organizational and operational ranging from security, competitive advantages in product development and R&D, to efficiencies from automating purchasing functions, EDI, point of sale information, and other inter-organizational transactions. To many familiar with EDI, doing commerce on the Internet is not entirely advantageous compared to traditional EDI. A clear tradeoff is made between secure but limited VANs using traditional EDI and an insecure but far more flexible network with messaging and remote login possibilities using the Internet. For example, Chevron Corp. of San Francisco pays over $1,200 each time it sends an EDI report to the U.S. government via a private VAN. In comparison, it pays about$2,000 per month for unlimited access to the Internet (Radosevich 1996). However, many consider the Internet to be inferior to EDI because of the perceived lack of security and reliability, even though they adjusting their EDI strategies to include the Internet. Already, Internet-oriented EDI applications, such as EDI/Open and Templar by Premonos Corp. (http://www.premonos.com), have reduced EDI prices and afforded small and medium size companies to take advantage of electronic transactions. However, many interactions between sellers and buyers happen before they are ready to exchange orders and bills. A somewhat broader view of electronic commerce includes these interactions between businesses and consumers. Consumer services and product announcements have been routinely released to the Internet by computer companies for many years. And increasingly, firms are gearing up for Internet advertising and © 2003 Choi, Stahl & Whinston 1-11