Introduction The widespread dissemination of information technology in the work place and home coupled with the increasing use of Internet and other computer networks has created a new way to conduct commerce. However, the nature of Internet commerce is still not well understood. Some of the strategies, structures and processes that were previously successful have not worked in this new business environment.
To learn how businesses can successfully use Internet commerce, we have undertaken an investigation of some key questions. For instance:
Firms have spent hundreds of billions of dollars on computers and communications equipment to create an information infrastructure that makes electronic commerce possible. By focusing our research in this area, we hope to discover how to best leverage those investments.
How Should Information Goods Be Priced? Analyzing Bundling, Site Licensing and Micropayment Systems as Aggregation and Disaggregation Strategies,
Yannis Bakos and Erik Brynjolfsson.
This project seeks to develop a unified theory for the effects of aggregation and disaggregation on the pricing, profits and efficiency. Bundling can be thought of as aggregation across products, site licensing across people and subscriptions across time. The models develop indicate that the optimal degree of aggregation may be radically different when marginal reproduction and transactions costs are very low.
In Search of "Friction-Free Markets": An Exploratory Analysis of Prices for Books, CDs and Software Sold on the Internet,
Joseph Bailey and Erik Brynjolfsson
We quantitatively and qualitatively examine pricing strategies for Internet commerce by examining prices for several near-commodity products from retailers on the Internet and a matched set of firms selling identical products through conventional channels. Thus far, we have collected and analyzed total of 23,789 observations from 52 Internet and conventional retailers and find that several of the common assumptions about pricing strategies in the Internet are not supported.
To Learn More If you would like more information about the Internet Commerce Group, contact Erik Brynjolfsson.
last update: 10/27/97