The Adoption Of Electronic Commerce By Traditional Specialized Markers: An Economic Analysis

Nowadays, the rise of electronic commerce and other forms of circulation have greatly influenced the future development of traditional specialized market. As known to all, electronic commerce has great advantages on reducing transaction cost, expanding market scope, improving transaction efficiency, etc., over traditional specialized market. Therefore, many traditional specialized markets diversify their transaction mode and procedure through cooperation with electronic commerce sites or constructing self-own site, in order to accelerate the process of transformation and upgrading. However, I find that in practice, the incentive problem of business owners' adopting electronic commerce is dismissed and relevant factors which affect their incentive are also underestimated largely. A game-theoretic model constructed in this paper pays more attentions on this problem and further analysis is carried out with evidences from Yiwu small commodity market.After reviewing the transaction cost theory and theory of new technology adoption, taking them as theoretical tools, this paper, from the economic perspective, studies the adoption of new technology by traditional specialized market, which is a kind of economic organization with Chinese characteristics,. The introduction of transaction cost theory is carried out under the circumstance of electronic commerce. According to the categorization of transaction costs in economic activities by economists, the composition of transaction cost in electronic commerce is analyzed, in chapter two. After that, the chapter three discusses the opportunities and challenges for traditional specialized markets during its development in electronic commerce era. By adopting electronic commerce, traditional specialized market may optimize original transactional mode, expand the market scope, realize transformation and upgrading, then keep its important role in promoting regional economic development. Therefore, after reviewing literatures on new technology adoption, especially those on factors influencing organizations' decision making, this paper constructs a general equilibrium framework of traditional specialized markets' adoption of electronic commerce as a transaction technology in chapter four, based on Conrad and Duchatelet(1987). We find that, many factors, as differences between online and offline markets, trust between wholesalers and business owners, expansion effect of internet, current scale of traditional specialized markets, will influence the adoption behaviors of traditional specialized markets and its firms. Diverse behaviors in adopting electronic commerce by different traditional specialized markets can be explained under different parameter sets.After that, taking Yiwu small commodity market, which is the biggest specialized market worldwide as an example, this paper studies the pattern of traditional specialized markets adopting electronic commerce in chapter five. We claim that although accelerating transformation and upgrading by adopting electronic commerce is a kind of inexorable trend for traditional specialized markets, different markets shall adopt electronic commerce and move forward the process of informatization by different ways.The conclusions and policy implications of analyses above are put forward in chapter six. I find that since the diverse effects of differences between online and offline market, trust between wholesaler and business owner, expansion effect of internet on traditional specialized market's adoption of electronic commerce, diverse measures is required in practice accordingly.