Consumer cost differences for traditional and Internet markets

Abstract

In this paper we address research issues related to the economics of electronic, Internet‐based markets. First, what are the consumer cost‐based differences for traditional and electronic markets? Second, what revenue implications does increased electronic market utilization have for sellers and transaction intermediaries? Based on an empirical, survey‐based study of an electronic market in the sports trading card industry we find that prices, search costs, and sales taxes are lower in the electronic markets, while risk costs, distribution costs, and market costs are lower in traditional markets. We discuss the implications this has for seller, intermediary and government revenue sources.