This article reviews the growing body of research on electronic commerce from the perspective of economic analysis. It begins by constructing a new framework for understanding electronic commerce research, then identifies the range of applicable theory and current research in the context of the new conceptual model. It goes on to assess the state-of-the-art of knowledge about electronic commerce phenomena in terms of the levels of analysis here proposed. And finally,it charts the directions along which useful work in this area might be developed. This survey and framework are intended to induce researchers in the field of information systems, the authors' reference discipline, and other areas in schools of business and management to recognize that research on electronic commerce is business-school research, broadly defined. As such, developments in this research area in the next several years will occur across multiple business-school disciplines, and there will be a growing impetus for greater interdisciplinary communication and interaction.

Economics and Electronic Commerce: Survey and Directions for Research

A simple approach, called PMP (Paris Metro Pricing), is suggested for dealing with congestion in packet networks such as the Internet. It is to partition a network into several logical networks, each of which would treat all packets equally on a best effort basis, just as the current Internet does. There would be no formal guarantees of quality of service. The separate networks would differ only in the prices paid for using them. Networks with higher prices would attract less traffic, and thereby provide better service. Price would be the primary tool of traffic management.

A Modest Proposal for Preventing Internet Congestion

Computer engineering, economics and public policy offer different perspectives on the problem of sustaining Internet growth without abandoning the technological innovations that underpin the infrastructure-and culture-of global information. This article offers a framework for addressing this interdisciplinary challenge. We examine how the often conflicting and overlapping interests of different Internet constituencies are beginning to yield to a rough consensus. In particular, we believe these constituencies are beginning to recognize that the growth of the Internet can be explained by a combination of three features: its technical characteristic of statistical sharing, its economic feature of positive network externalities, and its policy objective of interoperability.

Internet economics: when constituencies collide in cyberspace

Network service providers contract with network owners for connection rights, then offer individual users network access at a price. Within this hierarchy, the service provider must carefully provision and allocate (price) network resources (e.g. bandwidth). However, determining the appropriate amount to provision and allocate is problematic due to the unpredictable nature of users and market interactions. This paper introduces methods for optimally provisioning and pricing differentiated services. These methods maximizes profit, while maintaining a low blocking probability for each service class. The analytical results are validated using simulation under variable conditions. Furthermore, experimental results will demonstrate that higher profits can be obtained through shorter connection contracts.

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Optimal Provisioning and Pricing of Internet Differentiated Services in Hierarchical Markets

Electronic commerce (EC) is an industrial revolution that many industry and academic observers believe will transform the conduct of business and the structure of the marketplace. At the heart of the changes are a number of economic forces that will shape the manner in which goods and services are defined. They will also affect how new technologies are used by firms for strategic advantage, how firms organize themselves to compete in a changing marketplace, how the new electronic markets develop, and how the economy as a whole is impacted. In this article, we review these and other developments from the perspective of economic analysis in the context of the emerging research literature on EC. Our coverage in this survey spans the fields of Information Systems (IS), Computer Science (CS), Economics, Finance, Marketing and other relevant areas, where new and interesting work on information technology (IT) and EC on the Internet are rapidly developing. Our goals are threefold. (1) We identify the range of applicable theory and current research at a number of different conceptual levels of analysis in EC research. (2) We offer an assessment of the state-of-the-art of knowledge about EC phenomena in terms of the conceptual levels of analysis. (3) We chart the directions along which some of the most interesting work is likely to develop. This research will provide the stimulus for researchers from IS, our reference discipline, and other fields in schools of business and management to recognize that research in the area of EC is business school research, broadly defined. As such, one can expect to see developments in this research area in the next several years across multiple disciplines.

David W. Crawford

Papers

Internet services: a market for bandwidth or communication?