The paper "The Net: A Market Too Perfect For Profits’ " is a perfect example of an article on e-commerce. The article titled ‘ The Net: A Market Too Perfect For Profits’ basically explains the challenges for the e-commerce companies to have sustainable profit from e-commerce based businesses. The objective of this essay is to review this article and analyze the economic concepts employed in the article. The basic economic theory which has been dealt with in the article is competition and monopoly. The Internet-based e-commerce market on one side opens up a huge customer base for the companies.
The basic quality of this market in the economic point of view of the customer is that it provides transparency for the market operations. The customer gets an opportunity to compare the prices and the quality of competitive products. This resultantly nullifies market monopoly. In other terms, this increases competition. Higher competition reduces the margin of profit. The author has quoted the great mid-century economist, Joseph Schumpeter in support of this view. He had opined that imperfect competition is necessary for efficient capitalism. In the context of the e-commerce, the author has related this to confirm that the open and transparent sort of economy and market which e-commerce offers will limit the profit margin of the companies in the field.
In totality, the article explains the economic theories underlying market competition and monopoly. The e-commerce sector has been explained as a business which on one side offers transparency but on the other side limits, the profitability of the products offered. In generic economic terms, the whole scenario of e-commerce as explained in the article can be summed up as ‘ competition is inversely proportional to profit margins’ .