Volume 3,Issue 9
How E-commerce Benefits Consumers from an Economic Perspective
A rise of e-commerce has a huge impaction on individuals’ consumption behaviors. Many factors may explain its influence, but the relative economic theory is significant to be aware of for a better development in terms of national well-being. We used equilibrium price, Network Effect and the Price Dispersion model to indicate how online stores may benefit consumers through their specific characters such as organized information and comparatively low prices. By comparing models given different variables (variables in each model differed based on its corresponded market) and sketching their relative distribution functions, we observed that when the number of informed consumers increases, more shops would choose to set relatively low prices for their selling goods given there are both online and offline stores in the market. In addition, by applying the price dispersion model, we notice consumers would be better off in general when there is an increased quantity of online stores in the market. We also found online retail market decreases individuals’ valuation of offline store products. Thus, online stores benefit consumers by providing various choices and cheap products, which the offline stores would also follow. In this condition, consumers in general would be benefits from the online store in both online and offline purchase channel, respectively.
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