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The death of physical distance: An economic analysis of the emergence of electronic marketplaces*
Author(s) -
Choi Young Jun,
Suh Chung Suk
Publication year - 2005
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/j.1435-5957.2005.00037.x
Subject(s) - welfare , social welfare , partial equilibrium , economics , general equilibrium theory , public economics , microeconomics , business , market economy , law , political science
. This article studies the impact of the death of geographical distance brought about by e‐marketplaces on market equilibrium and social welfare. A partial equilibrium model for an economy with and without e‐marketplaces is developed. It is shown that e‐marketplaces lower the price level and improve consumers’ welfare, thus generating a sufficient condition under which e‐marketplaces improve social welfare. An optimal rate of sales tax on transactions through e‐marketplaces is derived.