The Micro Impact of Electronic Commerce on the Economy

For consumers, the information that flows from the company helps define both sets of products and their attributes, and shows the information that flows to companies reveal the preferences of the clients. Workers have clarified the ability to improve their capacity for potential employers, and companies want to announce the characteristics of opening and work.

The Micro Impact of Electronic Commerce on the Economy


Information is an important part of the modern economy. Although pure knowledge is separate from the entity, the cost of transmission, storage, and processing of information is for businesses and consumers. Electronic commerce has had such a great impact on today's economy because ICTs reduce information-related costs.

For companies, the information can be the product of the company itself (for example, financial transactions that do not involve physical products), direct inputs used to generate results (for example, data incorporated in geographic software), or indirect inputs to complement other inputs (for example, communication technology that makes it possible to outsource programming tasks). For consumers, the information flow from the company helps define the available product sets and their attributes, and the information that flows back to the company reveals customer preferences. For workers, information is also a two-way channel. Workers want to disclose information about their capabilities to potential employers, while companies want to advertise job vacancies and characteristics.

From the perspective of cost reduction, production process transformations that support e-commerce, such as outsourcing, instant inventory systems, and e-banking, are meaningful and predictable. Similarly, given the importance of information in search and matching markets (such as consumer purchases and job markets), the emergence of electronic intermediaries such as auction sites and online resume exchange makes sense. Where information transaction costs are high, the greater the benefits of using e-commerce practice, the market will naturally implement ICT there first. Reduced information costs can facilitate specific transactions and expand the transaction set included in specific markets. E-commerce expands the size of any market by reducing the cost of bringing together buyers and sellers that are geographically distant. Larger markets make the trading of goods and services more reliable and efficient, partly because larger markets usually have lower average costs associated with them.

THE Microeconomic Impacts of E-business

Electronic commerce fundamentally diminishes costs in a few markets, whereas in others it fortifies item separation and cost separation. Due to e-commerce, the costs of a few commodities have fallen drastically. Within the inquire conducted by Brynjolfsson and Smith (2000) it was found that the costs of books and CDs acquired online (counting shipping and charges) are normally much lower than those of conventional stores. The advertisement for unused items made by e-commerce, such as mp3 music downloads, e-book deals, and smartphone program applications, can be seen as an extraordinary frame of cost reduction.

Company-level Productivity

The efficiency of a company's production of goods or services depends on the interaction between the company's inputs and outputs. E-commerce can increase productivity by changing the way companies convert inputs into outputs. For example, the use of ICT has reduced the cost of coordinating workers assigned to different tasks, enabling the company to strengthen the specialization of jobs. The estimate here comes from company-level research and must be specific to the industry and technology being studied. The macroeconomic impact of electronic commerce covers the general macroeconomic impact of electronic commerce on productivity. The use of computers and other ICTs will increase productivity in the short term through the capital available to employees, in the long term, by increasing total factor productivity.

Electronic Commerce, Competition, and Industrial structure   

E-commerce can increase the economies of scale inside the center grandstand, since various online marketplaces, such as sell-off districts, require a divide of settled costs to build, but since the thing (information) is intangible, there are no irrelevant trades costs.

Economies of scale can result in a small number of colossal players controlling exhibit parts. Internet-based marketplaces, such as substance combination and exchange stages, as well appear to organize an impact: there are various merchants on the arrangement that will increase the exhibit liquidity, pulling in more merchants to put through the organization. In common, the alter of money-related interaction brought around by electronic commerce at the microeconomic level incorporates a basic impact on macroeconomic wonders, such as assess evaluation and other monetary courses of action, money-related approaches, widespread trade, and national money-related improvement.



WEB: The Microeconomic Impacts of E-Business on the Economy - James Prieger, Daniel Heil, 1,4,5,9,18 ...
WEB: Frictionless Commerce? A comparison of Internet and Conventional Retailers - Erik Brynjolfsson, Michael D. Smith, 2, 3, 6, 7 ...

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