Dynamics of the Behavior to E-Commerce’s Network Effects

Topics: Network effect, Economics, Microeconomics Pages: 15 (3215 words) Published: April 21, 2011
Dynamics of the behavior to e-commerce’s network effects
zuping zhu
School of management Fuzhou University Fuzhou, China zhuzuping@163.com Abstract—On the one hand, in network economy era, the traditional economic growth theory cannot explain the benefits of enterprise informationization well. Every customer could easily enter the network because of the quite low costs, and then the increasing customers will push the entire network to be an exponential growth, so information technology plays a positive feedback effect on the network system. On the other hand, based on system dynamics to analysis what the network effects will go on about e-commerce, finds out the relationship between the number of e-commerce network and e-commerce’s value. Therefore, the article analyses the enterprise how to implement ecommerce in order to come about network effects and then to make a great network value, thereby avoiding unsuccessful situation on e-commerce. Keywords-e-commerce; network effects; network value; system dynamics; 1

weiqing zhuang
School of management Fuzhou University Fuzhou, China zmakio@yahoo.com.cn research the process of information by system dynamics. Such as Lan Wang points out that Internet is a giant complex evolution system. Yong Tang, a text of “based on system dynamics to research the relationship between information and sustainable development” used system dynamics to analysis information subsystem, but had no in-depth consideration about the factor of network size. To sum up, e-commerce’s network effects is going with the development of information technology, and scholars begin to study on the issue of what value network size can bring to ecommerce. But there are very few researches about ecommerce’s network effects used by system dynamics, and there are few correlative researches in the field. II. PHENOMENON OF E-COMMERCE’S NETWORK EFFECTS



From beginning of economist J.Rohlfs studies on the network effects to the present, network effects becomes increasingly important issue in the network economy era. The traditional of productivity and value growth theory can not explain network value well in the network economy ear, so the scholars begin to research network size how to act the network effects and how network value will come to much? Yi-Nung Yang and C.C. Barret have further revised the monotonicity of traditional model and concave network effects function. They stressed that the exclusiveness and functionality of network products and proposed the non-monotonicity and non-concave network effects function to describe further directly relationship between network size and network effects. Of course, the field of network effects study comes from the beginning of pure economic problems to enterprise information. Domestic scholar Hai-Ou Hu in the text of “study on the network effects of the electronic payment system” points out that such as the market of electronic payment cards to take a unified technical standard will lead to more efficient results. It is the result of “network effects” more than “competitive effect”. Xian-Bo Xia’s “to research network effects under the background of information economy” points out the network effects operating mechanism on compatible and noncompatible products or technologies and further enriches the theory study about enterprise information network effects. About the research methods and tools, scholars began to

Along with the vigorous development of China’s Internet, up to December 31, 2007, the total number of Internet users in China reaches 210 million, new 48 million Internet users in the past 6 months. Under such a big environment, one of the development of enterprise information models is information system based on internet platform, such e-commerce as a way of enterprise trading has a certain history, and it is no strangeness to everyone. July 6, 2007, the 2007 International ECommerce Summit Forum in Shanghai pointed out that China’s...
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