The Economics of E-Commerce: A Strategic Guide to Understanding and Designing the Online Marketplace - Hardcover

Vulkan, Nir

Hardcover

ISBN 10: 069108906X ISBN 13: 9780691089065

Publisher: Princeton University Press, 2003

Synopsis

Despite the recent misfortunes of many dotcoms, e-commerce will have major and lasting effects on economic activity. But the rise and fall in the valuations of the first wave of e-commerce companies show that vague promises of distant profits are insufficient. Only business models based on sound economic propositions will survive. This book provides professionals, investors, and MBA students the tools they need to evaluate the wide range of actual and potential e-commerce businesses at the microeconomic level. It demonstrates how these tools can be used to assess a variety of existing applications.


Advances in web-based technology--particularly automation and delegation technologies such as smart agents, shopping bots, and bidding elves--support the further growth of e-commerce. In addition to enabling consumers to conduct automated comparisons and sellers to access visitors' background information in real time, such software programs can make decisions for individuals, negotiate with other programs, and participate in online markets. Much of e-commerce's economic value arises from this kind of automation, which not only reduces operating costs but adds value by generating new market interactions.


This text teaches how to analyze the added value of such applications, considering consumer behavior, pricing strategies, incentives, and other critical factors. It discusses added value in several e-commerce arenas: online shopping, business-to-business e-commerce, application design, online negotiation (one-to-one trading), online auctions (one-to-many trading), and many-to-many electronic exchanges. Combining insights from several years of microeconomic research as well as from game theory and computer science, it stresses the importance of economic engineering in application design as well as the need for business models to take into account the "total game."


As the only serious treatment of the microeconomics of e-commerce, this book should be read by anyone seeking e-commerce solutions or planning to work in the field.

About this title

About the Author

Nir Vulkan is University Lecturer in Management at the Saïd Business School and a Fellow of Worcester College, University of Oxford.

From the Back Cover

"This is a thorough, well-written book that I intend to use in my class on technology strategy."--Hal Varian, University of California, Berkeley

"Where is E-commerce going? We have had enough popular books giving us the vision thing. Here is a book which anyone can read that explains the economic principles that make sense of current experience."--Ken Binmore, University College London

"Aimed at MBA and postgraduate economics students, this book covers a new and interesting area. It reviews the basic economics of e-commerce and also discusses the application of game theory to e-commerce and mechanism design, including negotiations and auctions."--Simon Wilkie, California Institute of Technology

From the Inside Flap

"This is a thorough, well-written book that I intend to use in my class on technology strategy."--Hal Varian, University of California, Berkeley

"Where is E-commerce going? We have had enough popular books giving us the vision thing. Here is a book which anyone can read that explains the economic principles that make sense of current experience."--Ken Binmore, University College London

"Aimed at MBA and postgraduate economics students, this book covers a new and interesting area. It reviews the basic economics of e-commerce and also discusses the application of game theory to e-commerce and mechanism design, including negotiations and auctions."--Simon Wilkie, California Institute of Technology

Reviews

Picture the Internet-to-be as a vast bazaar where all the buyers and sellers are intelligent software agents. Naturally, these hustlers of the virtual marketplace will need economists to help them optimize their strategies, and that's where this engrossing primer on applied microeconomics comes in. Oxford economist Vulkan develops an analytical apparatus featuring the assumption of rationality, the concept of equilibrium, and lots and lots of game theory to help readers understand how e-commerce will play out. As consumers deploy their ShopBots to search for the lowest prices, on-line retailers will respond with personalized products and prices, and surreptitiously compile databases on individual customers to help anticipate and manipulate their purchasing decisions. Meanwhile, online traders will use complex bidding strategies to outwit each other at eBay auctions and Internet exchanges. Vulkan intends the volume as a textbook for MBA students, but although there are graphs and some simple equations, the material is not beyond the grasp of a patient layperson. Such readers will find an engaging and lucid discussion of basic principles in micro-economics, covering the ways in which competition, collusion, transaction costs and incomplete information affect prices and profits, and illuminating such mysteries as why no one trusts used-car salesmen. While providing a useful overview for consultants and Web designers, the insights here are as applicable to real life as they are to the on-line world.
Copyright 2003 Reed Business Information, Inc.

Edition details

• Publisher: Princeton University Press
• Publication date: 2003
• Language: English
• ISBN 10: 069108906X
• ISBN 13: 9780691089065
• Binding: Hardcover
• Number of pages: 240