The Effects of Business-to-Business E-Commerce on Transaction Costs

28 Pages Posted: 10 Dec 2000  

Luis Garicano

University of Chicago - Booth School of Business - Economics; Centre for Economic Policy Research (CEPR)

Steven N. Kaplan

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: July 2001

Abstract

This paper studies transaction costs changes arising from the introduction of the Internet in transactions between firms. We divide transaction costs into coordination costs and motivation costs. We classify coordination efficiencies into three categories: process improvements, marketplace benefits, and indirect improvements. For motivation costs, we focus on informational asymmetries. We apply this framework to internal data from an Internet-based firm to measure process improvements, marketplace benefits, and motivation costs. Our results suggest potentially large process improvements and marketplace benefits. We find little evidence that informational asymmetries are more important in the electronic marketplace than in the existing physical ones.

JEL Classification: D2, D4, L1

Suggested Citation

Garicano, Luis and Kaplan, Steven N., The Effects of Business-to-Business E-Commerce on Transaction Costs (July 2001). Available at SSRN: https://ssrn.com/abstract=252210 or http://dx.doi.org/10.2139/ssrn.252210

Luis Garicano

University of Chicago - Booth School of Business - Economics ( email )

Graduate School of Business
1101 East 58th Street
Chicago, IL 60637
United States
773-834-2862 (Phone)
773-702-0458 (Fax)

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Steven Neil Kaplan (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-4513 (Phone)
773-702-0458 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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