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The Effects of Business‐to‐Business E‐Commerce on Transaction Costs
Author(s) -
Garicano Luis,
Kaplan Steven N.
Publication year - 2001
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/1467-6451.00158
Subject(s) - transaction cost , the internet , business , process (computing) , industrial organization , database transaction , focus (optics) , marketing , computer science , finance , world wide web , programming language , operating system , physics , optics
This paper studies transaction costs changes arising from the introduction of the Internet in transactions between firms. We divide transaction costs into coordination costs and motivation costs. We classify coordination efficiencies into three categories: process improvements, marketplace benefits, and indirect improvements. For motivation costs, we focus on informational asymmetries. We apply this framework to internal data from an Internet‐based firm to measure process improvements, marketplace benefits, and motivation costs. Our results suggest potentially large process improvements and marketplace benefits. We find little evidence that informational asymmetries are more important in the electronic marketplace than in the existing physical ones.