The rapid growth of cross-border trade in retailing services

Gap, Inc. announced today that it is going to expand its online sales presence in Europe, and ultimately to 80 countries around the world. This is an excellent example of retail's emergence as a service that is not just theoretically tradable, but frequently traded. Scholars have often treated retailing as non-tradable, but it is time for this conventional wisdom to change.

Quantifying the Contribution of IT to Productivity

We hear a lot in economics about the role of information technology in increasing the productivity of firms. I stumbled across this paper today in which the authors make an interesting attempt at quantifying that effect. The bottom line: the effect of IT on productivity is real and significant, most notably over time and in combination with other organizational investments.

India's emerging services sector - request for your comments

Image source: Wikimedia Commons

India's rapid emergence as a powerhouse for services exports is one of the most remarkable trends in the 21st-century global economy. A colleague and I just gave a presentation about it. The presentation summarizes findings from a recent working paper that we completed with seven other colleagues. I would welcome any and all feedback.

Information trade-offs due to choice of shopping medium -- or, misadventures with plush fire trucks

Sometimes with online shopping, you do not buy what you think you are buying. Example: this fuzzy firetruck. Based on its photo on Amazon.com (Exhibit A), my wife and I thought it was relatively large, and excitedly bought it for our little man... only to discover that it was barely bigger than his fist (Exhibit B).

Exhibit A

Exhibit B

There is an interesting lesson here in the economics of retailing. I think it is well understood that online sales are not a perfect substitute for "brick-and-mortar" sales. But I think we are still trying to get a complete handle on what the trade-offs are. There are certain types of information that online sales make it easier for consumers to acquire, such as prices offered by various vendors and consumer reviews. But it can be harder for consumers to grasp information about product attributes such as textures and even size,  even if the product specs are provided online. Reading that something is made of satin is different from touching it; it can be hard to get a feel for the size of a doll photographed in isolation, even if the precise measurements are provided alongside a photo. It is interesting to me to try to think about:

1. How to quantify these information trade-offs, and how they affect consumer behavior and decisions vis-a-vis the medium through which transactions take place.

2. How the trade-offs may evolve as technologies evolve. Will we ever have computers that allow us to feel the texture of satin via our monitor screen?