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The death of physical distance: An economic analysis of the emergence of electronic marketplaces

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  • Young Jun Choi
  • Chung Suk Suh

Abstract

. This article studies the impact of the death of geographical distance brought about by e‐marketplaces on market equilibrium and social welfare. A partial equilibrium model for an economy with and without e‐marketplaces is developed. It is shown that e‐marketplaces lower the price level and improve consumers’ welfare, thus generating a sufficient condition under which e‐marketplaces improve social welfare. An optimal rate of sales tax on transactions through e‐marketplaces is derived.

Suggested Citation

  • Young Jun Choi & Chung Suk Suh, 2005. "The death of physical distance: An economic analysis of the emergence of electronic marketplaces," Papers in Regional Science, Wiley Blackwell, vol. 84(4), pages 597-614, November.
    • Handle: RePEc:bla:presci:v:84:y:2005:i:4:p:597-614
    DOI: 10.1111/j.1435-5957.2005.00037.x
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    Cited by:

    1. He, Yuan & Li, Ke & Wang, Yipan, 2022. "Crossing the digital divide: The impact of the digital economy on elderly individuals’ consumption upgrade in China," Technology in Society, Elsevier, vol. 71(C).
    2. Pinitjitsamut, Montchai, 2023. "The Economic Impacts of Electronic Transaction Development in Thailand," MPRA Paper 116867, University Library of Munich, Germany.
    3. ROCHELANDET, Fabrice & TAI, Silvio H.T., 2012. "Do privacy laws affect the location decisions of internet firms? evidence for privacy havens," MPRA Paper 37354, University Library of Munich, Germany.
    4. Rach, Sabine & Tschöpel, Michael, 2011. "Handelsplattformen im Internet: Eine Literaturstudie zur empirischen Evidenz," Arbeitspapiere 112, University of Münster, Institute for Cooperatives.

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