Introduction

Electronic commerce is a rapidly growing area enjoying considerable attention in conjunction with the emergence of the Information Superhighway or the building of the National Information Infrastructure (NII). Numerous firms are beginning to position themselves on this superhighway in terms of providing hardware, software, information content or services. It has also become important for other firms to hang out a shingle on the highway in the form of a home page on the World Wide Web.

Considerable changes in the economics of marketing channels, patterns of physical distribution and the structure of distributors are observable at present and others are likely to occur. This future world is well depicted in the vision of Vice President Albert Gore:

Anyone who wants to form a business to deliver information will have the means of reaching customers. And any person who wants information will be able to choose among competing information providers, at reasonable prices. That's what the future will look like--say, in ten to fifteen years (Gore, 1993).

The ideas and concepts presented here are based on five key assumptions:

1. Everyone and every organization will be connected.
2. The connections will be at a very high bandwidth rate, greater than a billion bits per second and sufficient to carry out interactive multi-media transactions.
3. Cheap, high-speed computation will be available to facilitate the implementation of low-cost coordination transactions.
4. A market choice box will serve as the interface between the consumer and the organization, and will provide interactive capabilities necessary to exercise free market choice in an easy and intuitive way.
5. There will be no market access favoritism.

The authors draw upon research based on previous studies focusing on transaction cost theory and electronic markets, suggesting that due to efficiencies gained intermediaries between the manufacturer and the consumer may be threatened as more and more electronic commerce manifests itself and as the NII reaches out to the consumer.

Profit margins may be substantially reduced. The consumer is likely to gain access to a broad selection of lower-priced goods.

There will be many opportunities to restrict consumers' access to the potentially vast amount of commerce.

An essential component of the evolution of this future world of electronic commerce is the market choice box. This is understood as the consumer's interface between the many electronic devices in the home such as television, cable, telephone and computer, and the information superhighway. In turn, this market choice box makes access possible to the vast variety of market choices. It appears that this device is likely to emerge as a critical technology enjoying considerable future attention in terms of public policy as it becomes an access device for consumers.

The authors examine electronic markets and the industry value chain from a transaction and transaction cost perspective. They will present a model of the NII that delineates key technology components and stakeholders. This model also allows the identification of several highly leveraged opportunities for rethinking and redefining industry value chains.