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The Effects of Business-to-Business E-Commerce on Transaction Costs (2000)
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| Venue: | Journal of Industrial Economics |
| Citations: | 55 - 1 self |
BibTeX
@ARTICLE{Garicano00theeffects,
author = {Luis Garicano and Steven N. Kaplan},
title = {The Effects of Business-to-Business E-Commerce on Transaction Costs},
journal = {Journal of Industrial Economics},
year = {2000},
volume = {49},
pages = {463--485}
}
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Abstract
In this paper, we study the changes in transaction costs from the introduction of the Internet in transactions between firms (i.e., business-to-business (B2B) e-commerce). We begin with a conceptual framework to organize the changes in transaction costs that are likely to result when a transaction is transferred from a physical marketplace to an Internet-based one. Following Milgrom and Roberts (1992), we differentiate between the impact on coordination costs and motivation costs. We argue that it is likely that B2B e-commerce reduces coordination costs and increases efficiency. We classify these efficiencies into three broad categories -- (1) process improvements; (2) marketplace benefits; and (3) indirect improvements. At the same time, B2B e-commerce affects incentive costs. In particular, we discuss the impact of the introduction of e-commerce on informational asymmetries. We implement this framework by analyzing detailed internal data from one Internet-based firm to measure process improvements, marketplace benefits, and motivation costs. We present less detailed data and analyses for one other firm. Our results suggest that process improvements and marketplace benefits are potentially large. We find little evidence that informational asymmetries are more important in the electronic marketplace we study than the existing physical ones. * Graduate School of Business, University of Chicago. This research has been supported by the Kauffman Foundation and the Center For Research in Security Prices. We thank Judy Chevalier, Charles Morris, Rod Parsley, Erik Peterson, Jagadish Turimella, and seminar participants at the NBER E-Commerce project for helpful comments and discussions. Address correspondence to Luis Garicano, Graduate School of Business, The University of Chic...
Keyphrases
transaction cost business-to-business e-commerce process improvement marketplace benefit graduate school informational asymmetry motivation cost erik peterson security price rod parsley internet-based one charles morris detailed data luis garicano detailed internal data seminar participant conceptual framework jagadish turimella nber e-commerce project electronic marketplace indirect improvement b2b e-commerce affect incentive cost kauffman foundation address correspondence judy chevalier physical marketplace coordination cost b2b e-commerce reduces coordination cost helpful comment broad category physical one little evidence internet-based firm
