A Study On The Entry Decision And Competitive Behaviors Of Different Parties Of Internet Commerce

After a flexuous development for several years, Internet Commerce gradually becomes an important commerce tool and a kind of economic phenomena in China. However, in China, there is strongly lack of theoretical and empirical studies done well in this field. This thesis tries to reveal the economic features of Internet Commerce using related economic theories, and understand the development and competitive behaviors of Internet Commerce in China through a field survey, as well as explain some important phenomena based on theoretical models.From the angle of different parties of Internet Commerce, namely the seller, buyer and intermediary, the entry decision of each party and the competitive relationship are studied. It is demonstrated that although Internet Commerce really has some new features, it will still be in the complementary position of the traditional commerce in the future. The traditional economic theories can still explain the phenomena of Internet Commerce and instruct the practice well, and the Internet companies still take the competitive strategies and tools used commonly in the traditional market. The main conclusion and contributions are as follows:Firstly, based on a model of dynamic game with perfect information and a model of purchase decision, the decision process and influence factors for seller and buyer are discussed respectively. It is shown that the view of "The traditional commerce will be replaced by e-commerce" is incomplete; e-commerce will be the complement of the traditional commerce, and the convergence of the traditional commerce and e-commerce will be a trend.Secondly, after a field survey of three types products aimed to 123 online and traditional retailers, a model based on the Salop (1979) and Hotelling (1929), named "circular city and isolated island" model, is built to explain the empirical results. The survey results show that there is no obvious Bertrand competition in current Internet Commerce market of China. However, the competitive characteristics of different kinds of products are not the same. Although there is obvious online price dispersion for each product, the online price level and price dispersion of the mobile phones are higher than those of the traditional market; the online price level of the books is significantly lower and the price dispersion is lower; the online price level of the IP card is slightly lower, and the price dispersion is the lowest among this three types of products. The essential reason for the price dispersion in the Internet market is the online retailers' differentiation strategy, by which the price competition can be alleviated, is demonstrated in the "circular city and isolated island" model. With the new market creation, Internet Commerce can also impact on traditional companies in different industries and with different product positions, but then the low price is not the necessary condition for online companies to erode the market share of the traditional companies.Thirdly, it is elucidated that Internet Commerce does not necessarily reduce the information asymmetry. Through an adverse selection model, the phenomenon that the reduced transaction cost in Internet Commerce induces overmuch seller in the market and results in serious adverse selection is demonstrated.Fourthly, through a microeconomic model with the buyer, seller and intermediary, it is argued that the intermediaries still could and should exist in Internet Commerce environment, and the efficient Internet intermediaries can facilitate the development of Internet Commerce from multiple aspects.