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The Effects of E-commerce on the Structure of Intermediation


  • Stefan W. Schmitz

    (ICE, Austrian Academy of Sciences)


The paper questions the notion that the diffusion of electronic commerce will lead to disintermediation. Rather than interpreting intermediation as a single service it is pointed out that intermediaries can provide a number of services. The analysis based on the New Institutional Economics, Market Microstructure Theory, and Information Economics shows that the three intermediation services studied are, generally, not under threat by the diffusion of electronic commerce. The overall effects on intermediation depend on the relevance of these services relative to others (e.g. order processing) which are supposed to become obsolete.

Suggested Citation

  • Stefan W. Schmitz, 2002. "The Effects of E-commerce on the Structure of Intermediation," Industrial Organization 0211002, EconWPA.
  • Handle: RePEc:wpa:wuwpio:0211002
    Note: Type of Document - pdf; prepared on wordfile on mac; pages: 36; figures: none. Will be published in C. Steinfield (ed.), New Directions in Research on E-Commerce, Purdue University Press, West Lafayette, Indianna (forthcoming)

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    References listed on IDEAS

    1. Kathy Baylis & Jeffrey Perloff, 2002. "Price Dispersion on the Internet: Good Firms and Bad Firms," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 21(3), pages 305-324, November.
    2. Yannis Bakos, 2001. "The Emerging Landscape for Retail E-Commerce," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 69-80, Winter.
    3. Jeffrey R. Brown & Austan Goolsbee, 2000. "Does the Internet Make Markets More Competitive?," NBER Working Papers 7996, National Bureau of Economic Research, Inc.
    4. Erik Brynjolfsson & Michael D. Smith, 2000. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Management Science, INFORMS, vol. 46(4), pages 563-585, April.
    5. Yannis Bakos & Erik Brynjolfsson, 1999. "Bundling Information Goods: Pricing, Profits, and Efficiency," Management Science, INFORMS, vol. 45(12), pages 1613-1630, December.
    6. Clay, Karen, et al, 2002. "Retail Strategies on the Web: Price and Non-price Competition in the Online Book Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 50(3), pages 351-367, September.
    7. Severin Borenstein & Garth Saloner, 2001. "Economics and Electronic Commerce," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 3-12, Winter.
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    Cited by:

    1. Pierre Volle, 2002. "Produit et information géographique : le géomerchandising," Post-Print halshs-00165165, HAL.

    More about this item


    B2C eCommerce; intermediation; new institutional economics;

    JEL classification:

    • L - Industrial Organization
    • L - Industrial Organization
    • B - Schools of Economic Thought and Methodology

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