Can Perfect Competition Achieved by Electronic Commerce?
Can perfect competition achieved by Electronic Commerce?
Introduction
Information and knowledge have emerged as most important sources of wealth in the recent years (Kehal & Singh 2005, p.vii). There is a computer-based technology storm and it has impact and influence on the global market, education and government. More and more people are using the personal computers and Internet, and it has becoming as a fundamental tool to our daily lives. We all directly or indirectly involved in the variety of processes of the new, on-line, knowledge-based economy. Kehal and Singh (2005, p.3) also state that the essential elements of digital economy is digitalization and intensive use of information and communication technologies (ICT); codification of knowledge; transformation of information into commodities and new ways of organizing work and production (Kehal and Singh, 2005, pp3). This implies that more and more products and services are available online. Is the increasing number of commodities available and information accessible online take us to a theoretic market in a perfect competition environment?
Some commentators argue that the Information technology will lead to the Perfect Competition in the new digital age. For example, Petre and Harrington(1996), the authors of “the Clever Country”, said that the online markets are making perfect competition appear feasible because it enables consumers to get comprehensive free information about the products being offered by large numbers of merchants across the world, and to purchase from there merchants with very low transaction cost.
In addition, a recent survey of Internet economics in the Economist (2000) states that the Internet cuts costs, increases competition and improves the functioning of the price mechanism. It thus moves the economy closer to the textbook model of perfect competition.
Adam Smith, who is widely regarded as the father of modern laissez-faire economics theory, helped define the
Introduction
Information and knowledge have emerged as most important sources of wealth in the recent years (Kehal & Singh 2005, p.vii). There is a computer-based technology storm and it has impact and influence on the global market, education and government. More and more people are using the personal computers and Internet, and it has becoming as a fundamental tool to our daily lives. We all directly or indirectly involved in the variety of processes of the new, on-line, knowledge-based economy. Kehal and Singh (2005, p.3) also state that the essential elements of digital economy is digitalization and intensive use of information and communication technologies (ICT); codification of knowledge; transformation of information into commodities and new ways of organizing work and production (Kehal and Singh, 2005, pp3). This implies that more and more products and services are available online. Is the increasing number of commodities available and information accessible online take us to a theoretic market in a perfect competition environment?
Some commentators argue that the Information technology will lead to the Perfect Competition in the new digital age. For example, Petre and Harrington(1996), the authors of “the Clever Country”, said that the online markets are making perfect competition appear feasible because it enables consumers to get comprehensive free information about the products being offered by large numbers of merchants across the world, and to purchase from there merchants with very low transaction cost.
In addition, a recent survey of Internet economics in the Economist (2000) states that the Internet cuts costs, increases competition and improves the functioning of the price mechanism. It thus moves the economy closer to the textbook model of perfect competition.
Adam Smith, who is widely regarded as the father of modern laissez-faire economics theory, helped define the