Niche Markets and Electronic Commerce
This paper investigates e-commerce strategies when in addition to the price, firms can control the size of the market area. Due to the shape of the commercial costs (e.g. costs of the e-commerce activity) the following results emerge: 1) if the average costs of commercial are decreasing in the market area size, firms serve the entire market, 2) if the average costs are U-shaped firms decide to limit the market area, 3) the firm’s behaviour is socially optimal. The paper also analyses the quality of the web-service, the formation of trade areas and the role of transport costs.
|Date of creation:||Jul 2003|
|Date of revision:||Jul 2003|
|Contact details of provider:|| Postal: via Sarfatti, 25 - 20136 Milano - Italy|
Web page: http://www.kites.unibocconi.it/
|Order Information:|| Postal: E G E A - via R. Sarfatti, 25 - 20136 Milano -Italy|
References listed on IDEAS
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- Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November. Full references (including those not matched with items on IDEAS)
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