Ecommerce

*   High P/E ratio of e-commerce and internet companies (300 or even higher) is out of proportion of any wild expectation. In particular, such high P/E ratio is usually associated with negative and declining profit of e-commerce companies due to the tendency of free provision of increasingly more e-commerce services. What is economic mechanism of this phenomenon that is inconsistent with the existing economic wisdom.
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*    Due to efficient increases in transaction costs (including the increases in risk for coordination failure and in the tangible amount of resources allocated to deleting unwanted message), many new economic issues become the focus of social debate and policy making. For instance, development of internet makes more difficult for employers to monitor employees. Many employers complain that internet generates a great deal of lose to them since employees now spend most of working time surfing on internet for company business unrelated affairs. Some software is developed for employers monitoring employees’ use of internet. Some employees take the matter to the court to claim that their privacy is infringed upon. Some employees have won the litigation. Will the size of the firm decrease due to more disintegration, outsourcing, down-sizing and less employment within the firm? If the employers win the case, will a larger market for software of monitoring the use of internet by employees emerge? Another heating debate is about reforms of the patent system. In 1999, more than two thousand internet related patents are registered. Somebodies propose to shorten length of patent protection of an e-commerce related invention and to speed up patent approval process.