The Economics of E-Commerce: A Strategic Guide to Understanding and Designing the Online Marketplace [Hardcover]

Nir Vulkan (Author)

Book Description

Publication Date: March 10, 2003

Despite the recent misfortunes of many dotcoms, e-commerce will have major and lasting effects on economic activity. But the rise and fall in the valuations of the first wave of e-commerce companies show that vague promises of distant profits are insufficient. Only business models based on sound economic propositions will survive. This book provides professionals, investors, and MBA students the tools they need to evaluate the wide range of actual and potential e-commerce businesses at the microeconomic level. It demonstrates how these tools can be used to assess a variety of existing applications.

Advances in web-based technology--particularly automation and delegation technologies such as smart agents, shopping bots, and bidding elves--support the further growth of e-commerce. In addition to enabling consumers to conduct automated comparisons and sellers to access visitors' background information in real time, such software programs can make decisions for individuals, negotiate with other programs, and participate in online markets. Much of e-commerce's economic value arises from this kind of automation, which not only reduces operating costs but adds value by generating new market interactions.

This text teaches how to analyze the added value of such applications, considering consumer behavior, pricing strategies, incentives, and other critical factors. It discusses added value in several e-commerce arenas: online shopping, business-to-business e-commerce, application design, online negotiation (one-to-one trading), online auctions (one-to-many trading), and many-to-many electronic exchanges. Combining insights from several years of microeconomic research as well as from game theory and computer science, it stresses the importance of economic engineering in application design as well as the need for business models to take into account the "total game."

As the only serious treatment of the microeconomics of e-commerce, this book should be read by anyone seeking e-commerce solutions or planning to work in the field.

Editorial Reviews

From Publishers Weekly

Picture the Internet-to-be as a vast bazaar where all the buyers and sellers are intelligent software agents. Naturally, these hustlers of the virtual marketplace will need economists to help them optimize their strategies, and that's where this engrossing primer on applied microeconomics comes in. Oxford economist Vulkan develops an analytical apparatus featuring the assumption of rationality, the concept of equilibrium, and lots and lots of game theory to help readers understand how e-commerce will play out. As consumers deploy their ShopBots to search for the lowest prices, on-line retailers will respond with personalized products and prices, and surreptitiously compile databases on individual customers to help anticipate and manipulate their purchasing decisions. Meanwhile, online traders will use complex bidding strategies to outwit each other at eBay auctions and Internet exchanges. Vulkan intends the volume as a textbook for MBA students, but although there are graphs and some simple equations, the material is not beyond the grasp of a patient layperson. Such readers will find an engaging and lucid discussion of basic principles in micro-economics, covering the ways in which competition, collusion, transaction costs and incomplete information affect prices and profits, and illuminating such mysteries as why no one trusts used-car salesmen. While providing a useful overview for consultants and Web designers, the insights here are as applicable to real life as they are to the on-line world.
Copyright 2003 Reed Business Information, Inc.

Review

A highly original study that will complement other works on the market. -- Library Journal



The Economics of E-Commerce is really a textbook for postgraduate economics. But in its sophistication, it's a valuable analysis of how e-commerce works in economic terms. Corporate e-traders can learn much from it. Well-written, it is accessible to anyone with a couple of years of economics under his or her belt. -- The Toronto Globe and Mail



The book represents the outcome of successful interdisciplinary research and an integrating tool in which computer science and economic theory are uniquely combined for business practice and academic research. . . . [It] interprets in an original and effective way current issues sometimes even neglected by economists [and] . . . represents a remarkable advance in the economic analysis of e-commerce. -- Marcella Scrimitore, The Economist

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Product Details

• Hardcover: 232 pages
• Publisher: Princeton University Press (March 10, 2003)
• Language: English
• ISBN-10: 069108906X
• ISBN-13: 978-0691089065
• Product Dimensions: 9.6 x 6.5 x 0.8 inches
• Shipping Weight: 1.1 pounds (View shipping rates and policies)
• Amazon Best Sellers Rank: #1,228,291 in Books (See Top 100 in Books)

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