The death of physical distance: An economic analysis of the emergence of electronic marketplaces*

Young Jun Choi and Chung Suk Suh

Papers in Regional Science, 2005, vol. 84, issue 4, 597-614

Abstract: Abstract. This article studies the impact of the death of geographical distance brought about by e‐marketplaces on market equilibrium and social welfare. A partial equilibrium model for an economy with and without e‐marketplaces is developed. It is shown that e‐marketplaces lower the price level and improve consumers’ welfare, thus generating a sufficient condition under which e‐marketplaces improve social welfare. An optimal rate of sales tax on transactions through e‐marketplaces is derived.

Date: 2005
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Citations: View citations in EconPapers (5)

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https://doi.org/10.1111/j.1435-5957.2005.00037.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:presci:v:84:y:2005:i:4:p:597-614

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