E-economy 73 E-COMMERCE AND CHANGING DISTRIBUTION AND PRODUCTION MODELS

Economists studying electronic commerce (e-commerce for short) have focused on the changes that it has brought to the way markets function—the central issue being the efficiency of electronic markets compared with conventional markets (Bailey, Smith, and Brynjolfsson 1998; Brynjolfsson and Smith 1999; Varian 1999; etc.). The aim is to determine whether Internet commerce lowers prices and narrows their dispersion, and whether it increases or reduces information asymmetries. Economists also examine the large-scale development of certain types of market and specific market procedures such as consumer-to-consumer (C2C) and auctions. There are two other related questions: Where is value created in these markets? Which economic players are likely to gain control of it? Without minimizing the importance of these phenomena and issues, we believe technology does not alter the nature and functioning of the markets as much as has been claimed. After an initial period of effervescence in which the thousand opportunities of technology appeared to challenge the very foundations of the economy, people finally rediscovered that markets rely on organizational principles and economic mechanisms that are relatively independent of their technological underpinnings. In our view, one should look in another direction to grasp the potential changes arising from e-commerce. These changes concern not only market functioning but, more broadly, industrial organization, i.e., the relationships between production and markets as well as the organization of production. More specifically, our hypothesis is that B2