In The late 1990s, firms bet billions of dollars on a theory that turned out to be wrong. It said that in e-commerce, what mattered most was being first. Don't worry about being best, if that slows you down. Sell your product at a loss, give it away, pay people to take it: just build your base of customers fast. Why? Because the weird economics of the Internet―network effects, enhanced economies of scale and lock-in―gave a decisive advantage to first-movers. Now that something approaching 100% of the Internet economy's first-movers have gone bust, this theory looks less plausible. Yet the logic once seemed persuasive. Where exactly did Internet economics go wrong? A new book by Stan Liebowitz, a professor of economics at the University of Texas at Dallas, and a long-time sceptic of the view that the Internet changes all the rules, gives the most thorough answer so far. "Re-Thinking the Network Economy" explains what the Internet did change and what it did not, so far as economics is con-cerned-an4 it does so in a witty and accessible way. It is the best book to date on the fallacies of the e-commerce craze.
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