Table 1: Quantities, Market Coverage, And Prices Among Incompatible Platforms Number Sales of Sales of Marke Price of Price of Price of Price of of firms largest firm second firm ird firm largest firm second firm third firm smallest firm ∑刂=q pl 6666 0.222222 2.222e-1 0.6357 02428 08785 0.T2604 00294 2948e2 00035 0169881 00030 0169873 00030 0169873 00030 Note that the addition of the fourth firm onward makes practically no difference in the sales and prices of the top three firms. Inequality of profits is even more pronounced. tries. Moreover, by its nature, the Internet has created new Disintermediation and standardization products that span borders. How national and international As mentioned earlier, one of the direct effects of the inter- laws will deal with them is uncertain net is the elimination of the middleman. when brokers that used to intermediate between customers and markets are Security And Privac eliminated and orders go directly to market, there are two The Internet was created as a basic network of low security important consequences. First, the specialized information on top of which more sophisticated secure communication originally clients is no longer available just to large clients. Large clients created to effect only loose integration among the computers typically lose an advantage. Second, the products offered in it interconnected, which were running various operating sys. markets tend to be standardized, and this increases liquidity tems. In its present form, the Internet allows easy unautho- further. Moreover, often the existence of the network brings rized access to proprietary user data even for sophisticated together two markets of similar products that used to be trad users who take precautions d under different specifications, which now become a single market of higher liquidity and increased standardization Moreover, the vast majority of Internet users are totally unaware of the security threat that the Internet poses on their Changing legal norms rivate information. By its nature, communication is two-way; The law that governs the Internet is, to say the least, uncer- in the absence of sophisticated protocols to block access to in. there are crucial unanswered questions private data and to encrypt transmitted data, Internet com- operty law and contract law, as well as many issues of trans- munication remains very insecure national application of laws. The global nature of the Internet brings to the fore a number of conflicts in business law, as well Many firms collect elaborate information about activities of as of intellectual property and privacy laws of various coun individuals on the Internet, expecting to use it to target adverDisintermediation and standardization As mentioned earlier, one of the direct effects of the Inter￾net is the elimination of the middleman. When brokers that used to intermediate between customers and markets are eliminated and orders go directly to market, there are two important consequences. First, the specialized information that was available from brokers exclusively to their large clients is no longer available just to large clients. Large clients typically lose an advantage. Second, the products offered in markets tend to be standardized, and this increases liquidity further. Moreover, often the existence of the network brings together two markets of similar products that used to be trad￾ed under different specifications, which now become a single market of higher liquidity and increased standardization. Changing legal norms The law that governs the Internet is, to say the least, uncer￾tain. There are crucial unanswered questions on intellectual property law and contract law, as well as many issues of trans￾national application of laws. The global nature of the Internet brings to the fore a number of conflicts in business law, as well as of intellectual property and privacy laws of various coun￾tries. Moreover, by its nature, the Internet has created new products that span borders. How national and international laws will deal with them is uncertain. Security And Privacy The Internet was created as a basic network of low security on top of which more sophisticated secure communication can be established. The Internet was intentionally originally created to effect only loose integration among the computers it interconnected, which were running various operating sys￾tems. In its present form, the Internet allows easy unautho￾rized access to proprietary user data even for sophisticated users who take precautions. Moreover, the vast majority of Internet users are totally unaware of the security threat that the Internet poses on their private information. By its nature, communication is two-way; in the absence of sophisticated protocols to block access to private data and to encrypt transmitted data, Internet com￾munication remains very insecure. Many firms collect elaborate information about activities of individuals on the Internet, expecting to use it to target adver￾The Impact of the Internet on financial markets 11 Number Sales of Sales of Sales of Market Price of Price of Price of Price of of firms largest firm second firm third firm coverage largest firm second firm third firm smallest firm I q1 q2 q3 ∑Ij=i qj p1 p2 p3 pI 1 0.6666 0.6666 0.222222 2.222e-1 2 0.6357 0.2428 0.8785 0.172604 0.0294 2.948e-2 3 0.6340 0.2326 0.0888 0.9555 0.170007 0.0231 0.0035 3.508e-3 4 0.6339 0.2320 0.0851 0.9837 0.169881 0.0227 0.0030 4.533e-4 5 0.6339 0.2320 0.0849 0.9940 0.169873 0.0227 0.0030 7.086e-5 6 0.6339 0.2320 0.0849 0.9999 0.169873 0.0227 0.0030 9.88e-11 7 0.6339 0.2320 0.0849 0.9999 0.169873 0.0227 0.0030 0 Table 1: Quantities, Market Coverage, And Prices Among Incompatible Platforms Note that the addition of the fourth firm onward makes practically no difference in the sales and prices of the top three firms. Inequality of profits is even more pronounced