E-COMMERCE AND THE INTERNET: RISKS AND OPPORTUNITIES FOR ESTABLISHED COMPANIES
Emmanuel Combe (Vice-President of the Competition Authority Affiliate Professor linked to ESCP Europe)
Internet, a vector for intra- and inter-brand competition
The growth of e-commerce may initially bring down prices, particularly following the entry of pure players on the market, as has been observed for some brown goods. In particular, pure players have two characteristics that are likely to encourage price competition: they do not have to manage price consistency between hard and online networks, and they bear lower distribution costs than hard-copy retailers. Moreover, on the Internet, the significant reduction in search costs makes it easier to compare offers and to arbitrate between offers and thus encourages price reductions, even if search costs have not disappeared. Finally, the internet leads to lower prices by decompartmentalising markets geographically, although companies are trying to control this phenomenon through re-routing strategies.