E-Business Economic Impact

Words: 1204
Pages: 5

The economic impacts of e-Business
Electronic business, also known as E-business, is the conduct of business on the internet and other computer networks. It doesn’t just involve buying and selling of products, but also customer services and collaborations with business partners. In recent years, e-business has developed rapidly and the e-purchasing system is becoming more popular all around the world. Electronic business (e-business) is a general concept covering any form of business transaction or information exchange executed using information and communication technologies (ICT). E-business may take place between multiple firms, between firms and their customers, or between firms and the government. E-business operations can be grouped into
…show more content…
E-Businesses can offer low prices due to their low costs of operation (no physical facilities, minimum inventories, etc.). If volume is large enough, prices can be reduced by 40 percent or more. Lower costs are only one way e-business may lower the aggregate price level. Since e-firms have lower menu costs (the costs of changing prices) than offline stores, their prices should be less rigid and they should adjust prices more often. Thus Business-to-Customer and Business-to-Business e-commerce lessens price rigidity, causing unexpected, temporary cost shocks to not have as great or as long lasting an effect on price levels. Other, more recent economic studies find that considerable price rigidity still exists among e-firms, however . Unlike one-time cost savings from adopting e- business, decreased menu costs can continue to alter the way adverse cost shocks are promulgated to prices on an ongoing basis, setting up persistent deflationary …show more content…
A key goal of monetary policy in most nations is price stability. E-business can produce significant cost reductions that lead to deflationary pressures. E-payments and e-money also affect monetary policy by creating “inside money”, which is money produced by the private sector instead of the central bank through the debt creation process. While mainstream monetary economics takes the passive view of inside money, some people argue that inside money should change the goal of the