Niche Markets and Electronic Commerce

Marco Alderighi
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Marco Alderighi: Universita' Commerciale "Luigi Bocconi" Milano

No 147, KITeS Working Papers from KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy

Abstract: This paper investigates e-commerce strategies when in addition to the price, firms can control the size of the market area. Due to the shape of the commercial costs (e.g. costs of the e-commerce activity) the following results emerge: 1) if the average costs of commercial are decreasing in the market area size, firms serve the entire market, 2) if the average costs are U-shaped firms decide to limit the market area, 3) the firm’s behaviour is socially optimal. The paper also analyses the quality of the web-service, the formation of trade areas and the role of transport costs.

Keywords: commercial costs; electronic commerce; monopolistic com-petition; transport costs; trade areas. (search for similar items in EconPapers)
JEL-codes: D21 D43 F12 L13 R12 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2003-07, Revised 2003-07
New Economics Papers: this item is included in nep-com, nep-geo, nep-ind, nep-ino and nep-tid
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