CIRJE-F-144. Nakayama Yuji and Kiyohiko G. Nishimura, "Does e-Commerce Always Increase Social Welfare in the Long Run?", January 2002.

We examine the effect of electronic commerce (ge-commerceh) on social welfare, in the framework of conventional spatial competition models. We consider the case where both conventional and electronic retailers coexist in equilibrium. We show that e-commerce does not necessarily increase social welfare in the long run. In particular, when electronic retailers have clear cost advantage over conventional retailers, then the advent of e-commerce is shown to reduce social welfare.