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Oligopolistic Business to Business E-Market and Welfare

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Author Info
Reiko Aoki (University of Auckland)
Abstract

We examine the effect of an oligopolistic upstream electronic market on upstream and downstream prices. The analysis highlights the two sources of competition that a firm that source from an electronic market (e- market firm) face: competition with less efficient firms that source traditionally (t-market firms) and competition among e-market firms. When size of the upstream e-market is small, the first effect dominates and there is higher profits with lower upstream prices in the e-market. When size of the e-market becomes very large, the second effect makes e- market firms less profitable than t-market firms even though e-market price may start to increase (as market size increases). As consequence, e-market will never completely eliminate the upstream t-market and downstream price can increase when e-market grows beyond a certain size.

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File URL: http://129.3.20.41/eps/io/papers/0012/0012004.pdf
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Publisher Info
Paper provided by EconWPA in its series Industrial Organization with number 0012004.

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Length: 14 pages
Date of creation: 11 Feb 2001
Date of revision:
Handle: RePEc:wpa:wuwpio:0012004

Note: Type of Document - Text in pdf, Figures in Word; prepared on IBM PC - PC-TEX; to print on HP; pages: 14 + 8 ; figures: request from author. Text in pdf. Figures in Word (also available from author)
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Related research
Keywords: business-to-business electronic commerce oligopoly vertical restraints e-markets

Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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. Kamien, Morton I & Tauman, Yair, 1986. "Fees versus Royalties and the Private Value of a Patent," The Quarterly Journal of Economics, MIT Press, vol. 101(3), pages 471-91, August. [Downloadable!] (restricted)
  2. David M. Newbery, 1998. "Competition, Contracts, and Entry in the Electricity Spot Market," RAND Journal of Economics, The RAND Corporation, vol. 29(4), pages 726-749, Winter. [Downloadable!] (restricted)
    Other versions:
  3. David Lucking-Reiley & Daniel F. Spulber, 2000. "Business-to-Business Electronic Commerce," Working Papers 0016, Department of Economics, Vanderbilt University. [Downloadable!]
    Other versions:
  4. David M. Kreps & Jose A. Scheinkman, 1983. "Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 326-337, Autumn. [Downloadable!] (restricted)
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