This course outline consists of 6 sections and 30 sessions to be used for a 15-week long session course, including:
I. Overview: The Electronic Marketplace II. Technologies and Commodities III. Marketing and Search IV. Product Choice and Pricing V. Price Discovery and Payments VI. Policy Issues and Outlook
Topics:
Enabling technologies: computers, software, telecommunications networks, contents
Infrastructure convergence
Readings:
EEC 1.1: Development in Inter-networking
EEC 1.2: What Is Electronic Commerce
FEC chapter 3: The Internet As a Network Infrastructure
Anderson, 1995, "The accidental superhighway," The Economist, July 1, 1995.
Bhimani, 1996, "Securing the commercial Internet," Communications of the ACM, June 1996.
Topics:
Sellers, virtual firms, intermediaries
Readings:
EEC 1.3: Market Characteristics of Electronic Commerce
REC chapter 7: Perils and pitfalls of practical Internet commerce: The lessons of First
Virtual's first year.
Topics:
Information goods, characteristics
Services: realtime services, remote education, online auctions and market clearing
Readings:
EEC chapter 2: Characteristics of Digital Products and Processes
Topics:
Process innovations: intra- and inter-business, consumer-oriented, products
Firm organization, consumer learning, marketing, market settlement process
Readings:
FEC chapter 7: Consumer-Oriented Electronic Commerce
FEC chapter 11: Intraorganizational Electronic Commerce
5. The Information Society
Topics:
Types of information goods
Production and dissemination of information
Intellectual property rights and market
Digitization, smart products
Readings:
EEC chapter 2
Barlow, 1993, "Selling wine without bottles: the economy of mind on the global net."
Okerson, 1996, "Who owns digital works?", Scientific American.
Topics:
Cost structure of digital products
Reproducibility and durability
Readings:
EEC 8.4: Pricing digital products
Topics:
Standardization
Effects of network externality
Readings:
EEC 2.2: Externalities of information products
EEC 11.9: Antitrust and regulation policies
Economics professors' amicus brief, in the case of lotus v. borland
Liebowitz and Margolis, 1994, "Network externality: an uncommon tragedy," Journal of
Economic Perspectives.
Topics:
Economic aspects of copyright
Incentives for producers vs. social progress
Copyright vs. free information
Copyright laws; Berne Convention, WIPO Conference
Technologies for content control vs. non-technology mechanisms
Readings:
EEC chapter 5: Economic aspects of copyright protection
Samuelson, 1994, "Legally speaking: the NII intellectual property report,"
Communications of the ACM.
Topics:
Changing patterns of usage
Consumer surplus and willingness to pay
Readings:
Paper to be prepared
10. Quality Uncertainty
Topics:
Market failures
Role of price
Other information channels
Readings:
EEC 4.1: Economis of the lemons market
Akerlof, 1970, "The market for lemons: quality uncertainty and the market mechanism,"
Quarterly Journal of Economics, 84: 488-500.
Case: AUCNET USA
Topics:
Seller-provided product information
Promotions: freeware, shareware, try-out
Short-term options
Readings:
EEC 4.2: Information channels in electronic commerce
Case: economics of freeware and free email services
Topics:
Role of intermediaries
Examples: intermediated markets in EC
Efficiency in intermediated markets
Financial services and investment in EC
Readings:
EEC 4.3: Quality and intermediaries
EEC 4.4: Intermediaries and contracts
EEC chapter 9: Financial intermediaries and electronic commerce
Topics:
Economics of advertising
Current trends
Web storefronts vs. physical market
Impression vs. click-through
Readings:
EEC 6.1: Advertising on the Internet
EEC 6.2: Economics of advertising
EEC 6.3: Other strategies to convey product information
Eaton and Grossman, 1986, "Provision of information as marketing strategy," Oxford
Economic Papers.
Eaves and Greene, 1996, "Brands' quality levels, prices, and advertising outlays: empirical
evidence on signals and information costs," International Journal of Industrial
Organization.
Case: CyberGold, DoubleClick
Topics:
Broadcast vs. targeted advertising
Push vs. pull advertising
Passive vs. active marketing
Marketing innovations in EC
Selling advertising as a product
Readings:
EEC 6.4: Marketing strategies for the Internet
FEC chapter 13: Advertising and marketing on the Internet
Topics:
Search costs
Search services
Advertising vs. consumer search: efficiencies
Readings:
EEC chapter 7: Consumers' search for information
FEC chapter 14: Consumer search and resource discovery
16. Product Differentiation
Topics:
Incentive to differentiate
Variations in user valuations
Demand information
Readings:
EEC 8.1: Product differentiation and pricing in economics
Perloff and Salop, 1985, "Equilibrium with product differentiation," Review of Economic
Studies, 52: 107-120.
Topics:
Gains and losses from customization
Technologies for personalization
Web casting
Privacy debate
Readings:
EEC 8.2: Product customization
EEC 8.3: Use of consumer information
FEC chapter 16: Software agents
Case: PointCast
Topics:
When prices are discriminatory
Consumer welfare calculations under price discrimination
Usage-based pricing
Readings:
EEC 8.1: Product differentiation and pricing in economics
Lewis and Sappington, 1994, "Supplying information to facilitate price discrimination,"
International Economic Review, 35: 309-327.
Topics:
Strategic factors in pricing
Incentive compatibility
Selling vs. renting
Bundling and unbundling: welfare considerations
Readings:
EEC 8.4: Pricing digital products
Adams and Yellen, 1976, "Commodity bundling and the burden of monopoly," Quarterly
Journal of Economics, 90: 475-498.
McAfee, McMillan and Whinston, 1989, "Multiproduct monopoly, commodity bundling,
and correlation of values," Quarterly Journal of Economics, 114: 371-383.
Odlyzko, 1996, "The bumpy road of electronic commerce."
(http://aace.virginia.edu/aace/conf/webnet.html)
20. Auctions and Posted Prices
Topics:
Online auction mechanisms
Price bidding vs. posting
Readings:
EEC 12.9: Market clearing mechanisms
REC chapter 13: Electronic markets
Topics:
Payment clearing services
Notational funds transfer
Digital currency
Readings:
EEC chapter 10: Electronic payment systems
FEC chapter 8: Electronic payment systems
Topics:
Digital currency technologies
Government revenues
Regulatory issues
Readings:
EEC 10.5: Properties and specifications of digital currencies
EEC 10.7: Digital currency and governments
Federal Reserve Bank of San Franscisco, 1995, "A brief history of our nation's paper
money," 1995 Annual Report. (http://www.frbsf.org/frbsf/annualrpt/history.html)
Greenspan, 1996, Remarks given to the U.S. Treasury Conference, Toward Electronic
Money and Banking: The Role of Government.
Topics:
Bundling, subscription and consumer behaviors
Microtransactions and micropayments
Scrips and coupons
Readings:
EEC 8.4: Pricing digital products
Balderston, 1996, "Online cash: a penny for your thoughts?: Digital's Millicent project
attempts to set standard for web micropayments," InfoWorld.
Bester and Petrakis, 1996, "Coupons and oligopolistic price discrimination," International
Journal of Industrial Organization, 14: 227-242.
Case: Millicent
24. EC Issues: Summary Evaluation
Topics:
Size on the Internet
Search services
Copyright
Consumer information
Pricing
Readings:
EEC chapter 11: Business and policy implications of electronic commerce (11.1-11.5)
Topics:
ISP access charges
Taxes on transaction
Legal framework for EC
Readings:
EEC chapter 3: Internet infrastructure and pricing
EEC 11.6: Taxation and the future of electronic commerce
EEC 11.7: Anonymity and legal environment for commerce
Topics:
Stanadardization and interoperability
Network externality
Vertical integration and market power
Antitrust and regulation
Readings:
EEC 11.9: Antitrust and regulation policies
"Microsoft agrees to break up."
Liebowitz and Margolis, 1995, "Are network externalities a new source of market failure?"
Research in Law and Economics, 17: 1-22.
U.S. Department of Treasury, 1996, "Selected tax policy implications of global electronic
commerce." (ftp://ftp.fedworld.gov/pub/tel/internet.txt)
Topics:
Future of enabling technologies
Process-oriented technologies
Integrated digital processes
Readings:
EEC chapter 12: Future directions for economic research (12.1-12.5)
FEC chapter 20: Mobile and wireless computing fundamentals
Case: new product/service design
Topics:
Virtual intermediaries
Digitally integrated economy
Readings:
EEC 12.6: Growth of virtual intermediaries
EEC 12.7: Customization and smart products
Hamalainen and Whinston, 1996, "Electronic markets for learning: education brokerage on
the Internet," Communications of the ACM, 39(6): 51-58.
Topics:
How a market is defined: new boundaries
Consumer and firm behaviors
Readings:
EEC 11.8: Global framework for electronic commerce
EEC 12.8: Globalization and cybernations
Maes, 1994, " Agents that reduce work and information overload," Communications of the
ACM, 37(7): 31-40.
Case: FireFly