Internet, adjustment of firms and the spatial division of labour

The rise of the Internet has been heralded as the 'death of distance' that may eventually entail a 'decline of the city'. Whether or not these futuristic visions will materialize will depend upon how firms and industries react to the Internet as a general-purpose technology. Besides the locational choice of New Economy firms themselves it is the adoption of E-commerce in industries of the 'old' economy which has the potential for re-shaping the economic geography of regions, and which may, in many instances radically so, change the way to manage the internal organization of firms as well as relationships with business partners (B2B) and with consumers (B2C). The paper aims at discussing elements of a conceptual approach for evaluating these spatial effects of E-commerce activities on locational patterns in the old economy by identifying suitable proxy indicators from existing evidence, such as connectivity to IT-infrastructures, sectoral differences in B2B solutions, market (de-)concentration processes, or changes of functional employment structures of cities. Key words: Internet, E-commerce, Organizational Change, Firm Location, Spatial Division of Labour

Internet, adjustment of firms and the spatial division of labour

The rise of the Internet has been heralded as the 'death of distance' that may eventually entail a 'decline of the city'. Whether or not these futuristic visions will materialize will depend upon how firms and industries react to the Internet as a general-purpose technology. Besides the locational choice of New Economy firms themselves it is the adoption of E-commerce in industries of the 'old' economy which has the potential for re-shaping the economic geography of regions, and which may, in many instances radically so, change the way to manage the internal organization of firms as well as relationships with business partners (B2B) and with consumers (B2C). The paper aims at discussing elements of a conceptual approach for evaluating these spatial effects of E-commerce activities on locational patterns in the old economy by identifying suitable proxy indicators from existing evidence, such as connectivity to IT-infrastructures, sectoral differences in B2B solutions, market (de-)concentration processes, or changes of functional employment structures of cities. Key words: Internet, E-commerce, Organizational Change, Firm Location, Spatial Division of Labou

Global strategic alliances in scheduled air transport - implications for competition policy

In international aviation, global strategic alliances (GSAs) have in recent years become an important form of cooperation between airlines. This cooperation has hit the antitrust nerve of the European Commission. Initially, the Commission had attempted to constrain both the market share of the major alliances in transatlantic air transport and their access to major European hubs (London and Frankfurt). The airlines maintain that they need alliances as an inevitable means to adapt to the changing environment in increasingly liberalized and globalized air transport markets in order to remain competitive and to fully realize their growth potential. The final verdict by the Commission will be published soon. Though the existing airline alliances are not stable enough to threaten competition and the openness of airline markets on a global scale, certain hubs or even city pairs might be in danger of being dominated by an individual alliance. This is all the more so as alliances in aviation — contrary to, e.g., strategic R&D alliances in manufacturing — are based on cooperating in a core area of the participants' commercial activities, which might end in collusion. On the other hand, alliances may indeed be regarded as an appropriate tool for internationally active firms to remain competitive. For analyzing alliances' impact on competition, networks seem to be more appropriate than city pairs. On the networks level, complementary alliances usually improve overall welfare via lower fares in all submarkets, whereas parallel alliances tend to result in higher prices in the former parallel markets and lower in other markets due to network spillover effects. Since GSAs in aviation are both of a complementary and a parallel nature, no clear-cut a priori position for or against alliances can be maintained based on conventional antitrust reasoning. From the new institutional economics perspective, alliances are ambiguous as well, because this perspective highlights the efficiency objectives of the participating carriers as well as the potential for collusion and opportunistic behavior. Empirical evidence on the market shares and pricing behavior of alliances and their members does not as yet reflect an increasing threat to competition by these forms of cooperation. But it should be noted that alliances appear to be gaining greater stability over time and that the number of independent competitors is shrinking. These independent competitors contribute much to the dynamics of the competitive process. If their vital role for competition were to be restricted, GSAs in airtransport might prove to be detrimental in the long run. The European Commission is right to be on the alert about GSAs having potentially detrimental effects on competition. However, the Commission should avoid overreacting in its zeal to keep markets open (contestable). It should be borne in mind that market access on transatlantic as well as on most other international air transport routes is still governed by the administrative provisions of intergovernmental bilateral agreements and not by market forces. Therefore, the rrtore relevant question for aviation.policy would be whether competition on the North Atlantic routes could be best maintained by scrapping the bilateral agreements and embarking on a truly liberal open skies aviation agreement between the EU, the United States, and other countries. --

Urban specialization in the internet age: Empirical findings for Germany

Declining spatial transaction costs will affect patterns of urban specialization. The underlying hypothesis is that production locations of goods and services which require face-to-face contacts will continue to be concentrated in core cities of large agglomerations even in the Internet age while locations of standardized production activities with a high codified information content will spread to more peripheral locations. The paper provides empirical evidence on changes in employment specialization patterns of nine different types of German districts (ranging from core cities of agglomerations to low density rural districts) for the period 1976 to 2002. Obviously there is an increasing concentration of "white collar" employees relative to "blue collar" workers in core cities which even gains momentum in particular in the second half of the 1990s

Transport in the Baltic Sea region: Perspectives for the economies in transition

The Baltic Sea region has been subject to processes of both disintegration and integration. On the southeastern shore of the Baltic Sea, former CMEA trade relations as well as the traditional system of Soviet socialist division of labour has disintegrated after 1991. With the exception of the Russian Federation's oblasts of Leningrad and Kaliningrad, the transition economies in the Baltic Sea region have turned to the West and are eager to participate in the process of European integration. Poland and Estonia participate in the negotiations for EU enlargement, sooner or later Latvia and Lithuania will follow suit. Physically, integration is brought about by transport that results from trade and other economic interchange. Hence, trade and further economic development may be hampered by all severe obstacles to transport – in the fields of transport infrastructures, of transport markets, of complementary legal frameworks, or of the daily transport business. In the present study, the authors analyse the current pattern of transport in the Eastern Baltic Sea region with special reference to the economies in transition, and identify and assess the various obstacles to transport in this region. Based on the empirical findings, the study presents economic policy recommendations and shows potential remedies to overcome such obstacles. Although missing infrastructure links and insufficient capacities are easily visible, the authors hold that "software" problems (arising from regulatory regimes, but in particular from administrative procedures) are more pressing than infrastructure deficiencies and should be addressed with urgency

Zur staatlichen Marktregulierung in der Bundesrepublik

[Vorwort] Im Dezember 1984 erteilte der Bundesminister für Wirtschaft dem Institut für Weltwirtschaft den Auftrag, ein Gutachten über "Deregulierungspotentiale in der Bundesrepublik" zu erstellen. Der größte Teil dieses Gutachtens - die theoretischen Grundlagen, die Rechtfertigungsanalyse der Regulierung und die Vorschläge zur Deregulierung - wurde als Kieler Studie Nr. 202 veröffentlicht. In der Studie konnten jedoch die Synopse der einschlägigen Rechtsvorschriften der Regulierungssysteme, die historischen Entwicklungslinien von Regulierungen, analytische Exkurse sowie statistische Informationen über die Struktur der Märkte nicht aufgenommen werden. Diese gerade für den nicht spezialisierten Leser empfindliche Lücke wird nun mit der Sonderpublikation "Zur staatlichen Marktregulierung in der Bundesrepublik" geschlossen.Ergänzungsband zu "Deregulierungspotentiale in der Bundesrepublik", Kieler Studie Nr. 202: http://hdl.handle.net/10419/107

Global strategic alliances in scheduled air transport – Implications for competition policy

In international aviation, global strategic alliances (GSAs) have in recent years become an important form of cooperation between airlines. This cooperation has hit the antitrust nerve of the European Commission. Initially, the Commission had attempted to constrain both the market share of the major alliances in transatlantic air transport and their access to major European hubs (London and Frankfurt). The airlines maintain that they need alliances as an inevitable means to adapt to the changing environment in increasingly liberalized and globalized air transport markets in order to remain competitive and to fully realize their growth potential. The final verdict by the Commission will be published soon. Though the existing airline alliances are not stable enough to threaten competition and the openness of airline markets on a global scale, certain hubs or even city pairs might be in danger of being dominated by an individual alliance. This is all the more so as alliances in aviation — contrary to, e.g., strategic R&D alliances in manufacturing — are based on cooperating in a core area of the participants' commercial activities, which might end in collusion. On the other hand, alliances may indeed be regarded as an appropriate tool for internationally active firms to remain competitive. For analyzing alliances' impact on competition, networks seem to be more appropriate than city pairs. On the networks level, complementary alliances usually improve overall welfare via lower fares in all submarkets, whereas parallel alliances tend to result in higher prices in the former parallel markets and lower in other markets due to network spillover effects. Since GSAs in aviation are both of a complementary and a parallel nature, no clear-cut a priori position for or against alliances can be maintained based on conventional antitrust reasoning. From the new institutional economics perspective, alliances are ambiguous as well, because this perspective highlights the efficiency objectives of the participating carriers as well as the potential for collusion and opportunistic behavior. Empirical evidence on the market shares and pricing behavior of alliances and their members does not as yet reflect an increasing threat to competition by these forms of cooperation. But it should be noted that alliances appear to be gaining greater stability over time and that the number of independent competitors is shrinking. These independent competitors contribute much to the dynamics of the competitive process. If their vital role for competition were to be restricted, GSAs in airtransport might prove to be detrimental in the long run. The European Commission is right to be on the alert about GSAs having potentially detrimental effects on competition. However, the Commission should avoid overreacting in its zeal to keep markets open (contestable). It should be borne in mind that market access on transatlantic as well as on most other international air transport routes is still governed by the administrative provisions of intergovernmental bilateral agreements and not by market forces. Therefore, the rrtore relevant question for aviation.policy would be whether competition on the North Atlantic routes could be best maintained by scrapping the bilateral agreements and embarking on a truly liberal open skies aviation agreement between the EU, the United States, and other countries

Deregulierungspotentiale in der Bundesrepublik.

Deregulierung; Einzelhandelspolitik; Finanzmarkt; Bankenpolitik; Telekommunikation; Energiepolitik; Verkehrspolitik; Deutschland;