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Frictionless economy and its implementation in real world


  • Yang, Yu


Frictionless economy is the new concept emerged from late 90s1. Its core idea is to remove the time both suppliers and customers spend on the trial and error on the price. So the markets always perform on the equilibriums. So markets can work in the perfect efficiency. But due to the various reasons, frictionless economy is rarely seen in the real world. The most common reason is lack of information. In last decade, the rise of internet and wide uses of IT technologies within businesses made the collection of information to be easier. Such trend renews people’s interesting on the frictionless economy. In this paper, we examine how exactly frictionless economy works and various reasons to prevent it to happen. We also suggest several solutions allow people to implement the frictionless economy in the real world if the only reason prevent them to have it is lack of information.

Suggested Citation

  • Yang, Yu, 2011. "Frictionless economy and its implementation in real world," MPRA Paper 34345, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:34345

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    References listed on IDEAS

    1. John H. Cochrane, 1999. "A Frictionless View of U.S. Inflation," NBER Chapters,in: NBER Macroeconomics Annual 1998, volume 13, pages 323-421 National Bureau of Economic Research, Inc.
    2. Ali Hortaçsu & F. Asís Martínez-Jerez & Jason Douglas, 2006. "The Geography of Trade on eBay and MercadoLibre," Working Papers 06-09, NET Institute.
    3. Il-Horn Hann & Christian Terwiesch, 2003. "Measuring the Frictional Costs of Online Transactions: The Case of a Name-Your-Own-Price Channel," Management Science, INFORMS, vol. 49(11), pages 1563-1579, November.
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    More about this item


    frictionless economy; equilibrium; perfect efficiency; online surveys; single item auction; selling data analysis; local equilibrium and global equilibrium;

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition

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