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Niche Markets and Electronic Commerce

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Abstract

This paper investigates e-commerce strategies when in addition to the price, firms can control the size of the market area. Due to the shape of the commercial costs (e.g. costs of the e-commerce activity) the following results emerge: 1) if the average costs of commercial are decreasing in the market area size, firms serve the entire market, 2) if the average costs are U-shaped firms decide to limit the market area, 3) the firm’s behaviour is socially optimal. The paper also analyses the quality of the web-service, the formation of trade areas and the role of transport costs.

Suggested Citation

  • Marco Alderighi, 2003. "Niche Markets and Electronic Commerce," KITeS Working Papers 147, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jul 2003.
    • Handle: RePEc:cri:cespri:wp147
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    References listed on IDEAS

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    More about this item

    Keywords

    commercial costs; electronic commerce; monopolistic com-petition; transport costs; trade areas.;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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