The shop around the corner in the Internet age1

Abstract

Back in the 1990's many analysts predicted that the so-called "new" economy would soon supersede the "old" one. Around-the-corner shops would not survive the Internet age. Yet, ten years later, few remote access firms are profitable. Capacity reductions, LBO and bankruptcies are numerous. In the short run at least, local firms tend to make larger profits and to have larger market shares despite the often aggressive pricing strategies of their "dot com" competitors.4 Several explanations have been put forward. In particular, it seems that the public's wariness of on-line payment systems was underestimated. Specific current research programs subsidized by the French government and the European Community are aimed at enhancing secure on-line technologies. In any case, the initial scenario of the analysts, focusing on supply differences in favor of on-line firms, largely underestimated demand effects. © De Boeck Université.