No abstract

No abstract

This paper analyzes the impact of e-commerce on markets where established firms face competition from Internet-based entrants with focused offerings. In particular, we study the retail brokerage sector where the growth of online brokerages and the availability of alternate sources of information and research services have challenged the dominance of traditional brokerages. We develop a stylized game-theoretic model to analyze the impact of competition between an incumbent fullservice brokerage firm with a bundled offering of research services and trade execution and an online entrant offering just trade execution. We find that as consumers' willingness-to-pay for research declines, the incumbent finds it optimal to unbundle its offering when competing with the online entrant. We also find that the online entrant chooses a lower quality of trade execution when faced with direct competition from the incumbent's unbundled offering. The analytical model motivates a unique field experiment placing actual simultaneous trades with traditional full-service and online brokers, to compare order handling practices and the quality of trade execution. In keeping with our analytical results, our empirical findings show a significant difference in the quality of execution between online brokerages and their full-service counterparts. We discuss the relevance of our findings for quality differentiation, price convergence and profit decline in a variety of markets where traditional incumbents are faced with changes in the competitive landscape as a result of e-commerce.

M etrics are sine qua non for solid research, and scientific metrics have now been advanced with new approaches in the arena of Net-enablement (NE), otherwise known as e-commerce. Questions that likely require additional attention include: (1) Where/what is the real value in substituting information for physical processes?, (2) which NE systems effectively support end-to-end fulfillment?, and (3) when should a Net-enabled organization share information? With respect to extant studies in Net-enhancement, the field has been advanced in three methodological dimensions. Multiple methods have been used to validate measures. Approaches to metrics using archival/secondary data have also been initiated. Finally, strong external validity has been established through large scale data gathering.

The London Stock Exchange's Big Bang on October 27, 1986 marked the arrival of sweeping a n d long-awaited deregulation. Numerous c h a n g e s o c c u r r e d simultaneously, including elimination of fixed commissions, marked increase in the number of market participants, change i n t h e structure a n d ownership of trading firms, and perhaps most importantly rapid movement of stock trading off the floor of the Exchange.This remains the most rapid and complete regulatory reform of any market, and the most striking example to date of a regulatory event engineered to benefit the local financial industry.Since the overhaul of established securities trading practices, London's financial markets have undergone considerable change while continuing to operate smoothly; a number of benefits have been realized.