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Does e-Commerce Always Increase Social Welfare in the Long Run?

Author

Listed:
  • Yuji Nakayama

    (College of Economics, Osaka Prefecture University)

  • Kiyohiko G. Nishimura

    (Faculty of Economics, University of Tokyo)

Abstract

We examine the effect of electronic commerce ("e-commerce") on social welfare, in the framework of conventional spatial competition models. We consider the case where both conventional and electronic retailers coexist in equilibrium. We show that e-commerce does not necessarily increase social welfare in the long run. In particular, when electronic retailers have clear cost advantage over conventional retailers, then the advent of e-commerce is shown to reduce social welfare.

Suggested Citation

  • Yuji Nakayama & Kiyohiko G. Nishimura, 2002. "Does e-Commerce Always Increase Social Welfare in the Long Run?," CIRJE F-Series CIRJE-F-144, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2002cf144
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    References listed on IDEAS

    as
    1. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    2. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    3. David M. Kreps & Jose A. Scheinkman, 1983. "Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 326-337, Autumn.
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