TY  - JOUR
AU  - Garicano,Luis
AU  - Kaplan,Steven N.
TI  - The Effects of Business-to-Business E-Commerce on Transaction Costs
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8017
PY  - 2000
Y2  - November 2000
UR  - http://www.nber.org/papers/w8017
L1  - http://www.nber.org/papers/w8017.pdf
N1  - Author contact info:
Luis Garicano
Departments of Management and Economics and
Centre for Economic Performance
London School of Economics
Houghton Street
London WC2A 2AE
United Kingdom
E-Mail: garicano@lse.ac.uk

Steven N. Kaplan
Booth School of Business
The University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-4513
Fax: 773/702-0458
E-Mail: steven.kaplan@chicagobooth.edu
AB  - In this paper, we study the changes in transaction costs from the introduction of the Internet in transactions between firms (i.e., business-to-business (B2B) e-commerce).  We begin with a conceptual framework to organize the changes in transaction costs that are likely to result when a transaction is transferred from a physical marketplace to an Internet-based one.   Following Milgrom and Roberts (1992), we differentiate between the impact on coordination costs and motivation costs.   We argue that it is likely that B2B e-commerce reduces coordination costs and increases efficiency.  We classify these efficiencies into three broad categories   (1) process improvements; (2) marketplace benefits; and (3) indirect improvements. At the same time, B2B e-commerce affects incentive costs.  In particular, we discuss the impact of the introduction of e-commerce on informational asymmetries.  We implement this framework by analyzing detailed internal data from one Internet-based firm to measure process improvements, marketplace benefits, and motivation costs.  We present less detailed data and analyses for one other firm.  Our results suggest that process improvements and marketplace benefits are potentially large. We find little evidence that informational asymmetries are more important in the electronic marketplace we study than the existing physical ones.
ER  -