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The Effects of Business-to-Business E-Commerce on Transaction Costs

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Garicano, Luis
Kaplan, Steven N

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Abstract

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. Copyright 2001 by Blackwell Publishing Ltd

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Article provided by Blackwell Publishing in its journal Journal of Industrial Economics.

Volume (Year): 49 (2001)
Issue (Month): 4 (December)
Pages: 463-85
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Handle: RePEc:bla:jindec:v:49:y:2001:i:4:p:463-85

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  1. Masten, Scott E & Crocker, Keith J, 1985. "Efficient Adaptation in Long-term Contracts: Take-or-Pay Provisions for Natural Gas," American Economic Review, American Economic Association, vol. 75(5), pages 1083-93, December. [Downloadable!] (restricted)
  2. Bond, Eric W, 1982. "A Direct Test of the "Lemons" Model: The Market for Used Pickup Trucks," American Economic Review, American Economic Association, vol. 72(4), pages 836-40, September. [Downloadable!] (restricted)
  3. Francine Lafontaine & Margaret E. Slade, 1998. "Incentive Contracting and the Franchise Decision," NBER Working Papers 6544, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August. [Downloadable!] (restricted)
  5. Francine Lafontaine, 1992. "Agency Theory and Franchising: Some Empirical Results," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 263-283, Summer. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Aymeric Dussart & Benoit A. Aubert & Michel Patry, 2002. "An Evaluation of Inter-Organizational Workflow Modelling Formalisms," CIRANO Working Papers 2002s-64, CIRANO. [Downloadable!]
  2. Neus Palomeras, 2005. "An Analysis of Pure-revenue Licensing," Faculty Working Papers 12/05, School of Economics and Business Administration, University of Navarra. [Downloadable!]
  3. Joanne Loundes, 2002. "Cost Focussed Firms and Internet Usage," Melbourne Institute Working Paper Series wp2002n29, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
  4. Yannick Gabuthy & Nadège Marchand, 2004. "Does Resorting to Online Dispute Resolution Promote Agreements? Experimental Evidence," Experimental 0402002, EconWPA. [Downloadable!]
  5. Yannick Gabuthy & Nadège Marchand, 2004. "Does Resorting to Online Dispute Resolution Promote Agreements? Experimental Evidence," Working Papers 0401, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure. [Downloadable!]
  6. Heinz Hollenstein & Martin Woerter, 2007. "Inter- and Intra-Firm Diffusion of Technology: the Example of E-commerce : An Analysis based on Swiss Firm-level Data," Working papers 07-157, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
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  7. David Bruce Allen & Enrique Dans, 2002. "B2B e -Marketplaces. What´s In It For Me?," Working Papers Economia wp02-28, Instituto de Empresa, Area of Economic Environment. [Downloadable!]
  8. Enrique Dans, 2002. "IT As Agent Of Social Change: Lonxanet And The Case Of The Galician Artisanal Fisheries," Working Papers Economia wp02-26, Instituto de Empresa, Area of Economic Environment. [Downloadable!]
  9. Heinz Hollenstein & Martin Woerter, 2004. "The Decision to Adopt Internet-based E-Commerce : An Empirical Analysis Based on Swiss Firm-level Data," Working papers 04-89, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
  10. Bertschek, Irene & Fryges, Helmut, 2002. "The Adoption of Business-to-Business E-Commerce: Empirical Evidence for German Companies," ZEW Discussion Papers 02-05, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  11. Barbara M. Fraumeni, 2001. "E-Commerce: Measurement and Measurement Issues," American Economic Review, American Economic Association, vol. 91(2), pages 318-322, May. [Downloadable!] (restricted)
  12. Irene Bertschek & Helmut Fryges & Ulrich Kaiser, 2006. "B2B or Not to Be: Does B2B E-Commerce Increase Labour Productivity?," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 13(3), pages 387-405, November. [Downloadable!] (restricted)
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  13. Emin M. Dinlersoz & Pedro Pereira, 2006. "On the Diffusion of Electronic Commerce," Working Papers 13, Portuguese Competition Authority. [Downloadable!]
    Other versions:
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