Communication

Increasing income share of communication cost. The cost to delete useless message increases as communication efficiency increases. This is a typical network phenomenon: as communication efficiency increases, search scope enlarges, and income share of cost for deleting information that is not finally used increases. Another example of this phenomenon is that the city that upgrades transportation and communication infrastructure most rapidly has the most serious traffic jum. This network development phenomenon of increasing income share of transaction cost might be efficient as long as positive network effect of expanding network on aggregate productivity outweighs increasing transaction and communication costs.
*   As the reliability of each communication connection efficiency increases, the efficient reliability of the whole network decreases. In other words, aggregate risk of coordination failure of an increasingly larger network of e-commerce increases. Many news on devastating impacts of internet virus and paralysis of the whole network caused by paralysis of a link in the network provide evidences for this phenomenon.