The death of physical distance: An economic analysis of the emergence of electronic marketplaces
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. Copyright RSAI 2005.
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Volume (Year): 84 (2005)
Issue (Month): 4 (November)
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