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The Concentration Phenomenon in E-commerce

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Postal and Delivery Innovation in the Digital Economy

Part of the book series: Topics in Regulatory Economics and Policy ((TREP,volume 50))

Abstract

The universality of the Internet led experts to expect markets to expand and the range of products and services to proliferate, making Internet-related markets more transparent and competitive. Electronic commerce, in particular, has been seen as an opportunity for retailers to expand their market over a geographically limited customer catchment area. For example, Poon and Jevons (1997) were amongst the first to recognize the potential benefits that the Internet offered to retailers, suggesting that it “creates an unprecedented opportunity for businesses to engage in national and international marketing campaigns that previously would have been unaffordable” (p. 29). This would tend to reduce their (local) market power and increase the intensity of competition. But in many Internet-related markets, only few businesses have emerged, and often one actor is in a dominant position. This phenomenon is observed in the B2C e-commerce market all around the world. In countries where online commerce is relatively well developed, such as France, Germany, the United Kingdom, the USA and even China, despite a large number of merchant sites, the online selling business is highly concentrated around a few major actors and appears to be more concentrated than offline commerce.

The opinion expressed in this paper are mine and do not necessarily reflect the position of La Poste. I would like to sincerely thank Helmuth Cremer, Meloria Meschi, Denis Joram and Didier Brune for their helpful comments.

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Notes

  1. 1.

    Concentration is also an issue regarding sales. In particular, two opposite views exist about the effect of digitalization on the concentration of sales, in particular of cultural goods. Some authors predict a shift in demand from the most popular products (the hits) to niche products, and thus a decrease in concentration. This is the ‘long tail’ effect, coined by Anderson (2004, 2006). Others believe that Internet reinforces the popularity of bestsellers and thus increases concentration. This is the ‘superstar’ effect (Rosen 1981; Adler 1985; MacDonald 1988) or the ‘winner-takes-all’ phenomenon (Frank and Cook 1995). The existence of this long tail effect vs. the superstar one is heavily debated. Empirical studies provide conflicting results both in the book industry, in the video industry and in the music (CD) industry. The long tail theory is sometimes confirmed and sometimes contradicted by facts.

  2. 2.

    Is this concentration good or bad? Would concentration limit the expected benefits of e-commerce (access to a large offer at better price)? Should public authorities intervene to safeguard some (artificial?) competition between actors? If yes, how regulate actors in order to promote competition?

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Author information

Authors and Affiliations

  1. Economist at the European and National Regulation Division, Groupe La Poste, Paris, France

    Claire Borsenberger (Associate Professor)

  2. the University of Tours, Laboratoire d’Economie d’Orléans, Paris, France

    Claire Borsenberger (Associate Professor)

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  1. Claire Borsenberger
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Correspondence to Claire Borsenberger .

Editor information

Editors and Affiliations

  1. CRRI Distinguished Professor of Regulatory Economics, Rutgers University, Rutgers Business School, Newark, New Jersey, USA

    Michael A. Crew

  2. Department of Public Policy, Professor of Public Policy and Economics, University of Maryland, Baltimore County (UMBC), Baltimore, USA

    Timothy J. Brennan

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Borsenberger, C. (2015). The Concentration Phenomenon in E-commerce. In: Crew, M., Brennan, T. (eds) Postal and Delivery Innovation in the Digital Economy. Topics in Regulatory Economics and Policy, vol 50. Springer, Cham. https://doi.org/10.1007/978-3-319-12874-0_3

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