Electronic markets and electronic governments

This paper continues research on the effects of information technology (IT) on the organization of markets and industries by examining the role of IT on the efficient limits of governments. The paper draws on existing research to show that, as with the organization of transactions between markets and hierarchies, IT has changed the cost and benefit structures of transactions. The conclusion is that some transactions which were efficiently carried out by governments before the introduction of IT may now be more effectively accomplished in the private sector leading to a reduction in the size of government. On the other hand, transactions accomplished in the private sector or not accomplished at all prior to the availability of IT may now be most efficiently accomplished by governments. The paper also highlights legislative constraints on the abilities of governments to realize economies in the provision of IT-based services and uses real world examples to illustrate practical instantiations of the theoretical argument it presents