Economics of E-commerce

Author: Soon-Yong Choi, Dale O. Stahl, Andrew B. Whinston
Publisher:
Publication Date: 2000-09-01
Features:
Review: The Return of Economic Principles
When the wave of the internet economy crashes upon us, we are dazzled by the thrilling "attention" wars, intoxicated by the virtual worlds of sound and image animations, bewildered by the endless new terms and concepts, and exhilarated by the seemingly boundless prospects of online business opportunities. Regardless of how much virtual the air is filled with, or how many promises about high technology linger in our ears, beneath the fading night, from the top of high-rise buildings, watching the streams of traffic below the city lights, we will find that the world around us remains the same old world that follows rules, and the nightmare of "The Matrix" still lies far away.
If you are looking for practical inspiration amidst the diverse colors of the internet, or if you wish to draw genuine inspiration from the, I suggest you take the time to read E-commerce Economics, recently published by China Machine Press. After reading it, you might gain the following insight: e-commerce is not a creature that suddenly appeared out of nowhere. The development of information technology led to the birth of the internet, and in 1993, when the internet entered commercial applications, e-commerce was born. Some say this is a shift in economic paradigms, but the transactional essence that e-commerce and the internet economy follow remains traditional economics. It is still a market between buyers and sellers, a platform for transactions, and it still reflects supply and demand balance and value laws. The internet economy can only grow and thrive on the foundation of traditional economics. Therefore, analyzing the current economic characteristics of e-commerce using the basic principles of traditional economics is what truly captures the essence of the phenomenon.
In today's market, there are far too many books that teach you how to use the internet or how to create web pages for successful merchants, and many more patiently convey the wonders and new concepts hidden beneath the halo of e-commerce. In contrast, the authors of this book approach the subject with a rigorous attitude, introducing you to the basic economic principles of e-commerce. This seems like a neglected corner of the internet, yet the survival and development of the internet also depend on non-technical knowledge, and to some extent, it is a fundamental. Increasingly rational analyses of the internet economy are proving this point. The myth of hyping the internet economy may no longer be fresh, nor is it necessary to doubt or even despair about it. As long as we approach new phenomena with objectivity and scientific analysis, and maintain calm innovation on the right path, the prospects remain bright and full of vitality. After all, the economic development of humankind follows a spiral upward curve, much like technological advancement.
Analyzing e-commerce using standard microeconomic principles and defining and explaining many of the new problems encountered in actual business processes is the most significant argumentative approach in this book. As you read, reflecting on real-life situations often leads to moments of enlightenment and a sense of fulfillment. In terms of content, the book treats e-commerce as a market. The authors believe that the core of e-commerce is the digital transaction process between buyers and sellers, where production, delivery, and payment are all digitized, while marketing and consumer inquiries are the digital equivalents of shopping. Beyond online delivery, non-digital product merchants are also affected by the unique business processes of the internet in areas such as product information dissemination, sales tracking, and consumer information collection, as well as the application of engineering technology and customer service. From these influences, the authors focus on economic issues that other existing works have not addressed. The main issues include six aspects: the quality and role of intermediaries, digital copyright, advertising, consumer inquiries about product information, product selection and pricing strategies, and electronic finance and payment services. Considering that the solution for most cases has not yet been tested by the market, in each category, the authors provide various recommendations and guidance, along with the short-term and long-term implications and the understanding of different branches of economics.
As e-commerce matures, economic analysis becomes increasingly important. From the fervent commercial competition to the swirling technological waves, the rational return to economic principles is the true criterion by which history records are filtered. It is clear that merchants who have succeeded by applying these theories will hold a significant competitive advantage in this emerging business world. Therefore, the authors Soon-Yong Choi, Dale O. Stahl, and Andrew B. Whinston do not intend to limit the readers to experts and students in the field of economics. They use numerous case studies and plain language to explain what could be professional terms in a simple and clear manner, skillfully connecting ideas throughout the book to deepen understanding without redundancy. The book is well-written, rigorous yet engaging, and the concepts are accurate yet novel.
If you are currently or planning to enter the e-commerce field—whether you are an entrepreneur, investor, or merchant—consider taking the time to read it—E-commerce Economics. The book primarily discusses the economic issues surrounding e-commerce. It first defines e-commerce as a market, analyzes the characteristics of the e-commerce market, and defines the concept of digital products. Then, it systematically examines various issues related to the market, including quality uncertainty and market efficiency, copyright protection, online marketing, product pricing, and electronic payments, presenting its own perspectives and making predictions about strategic prospects. To facilitate in-depth economic research, the book also includes numerous case studies and explanations of terms. The target readers are not only experts and students studying economics but also business practitioners and general readers. The economic themes it explores cover the fundamental aspects of e-commerce, making it relevant to anyone considering entering the e-commerce field—whether preparing to start a business, invest, or engage in commerce.