An analysis of the effects of electronic commerce on the Korean economy using the CGE model

The purpose of this paper is to analyze the economic effects of foreign direct online purchasing on the Korean economy using computable general equilibrium and to analyze the future growth of electronic commerce. We assumed that foreign online direct purchasing has reduced transaction costs in two ways: reduction of tariff equivalents and a decline in direct import prices. Simulation results showed that the reduction of both tariff equivalents and import prices due to an increase in foreign direct online purchasing increased the public welfare of the Korean economy. We also found that the reduction of import prices had a greater impact on the welfare increase than did the tariff reduction. Therefore, electronic commerce has a positive impact on the Korean economy, and we expect that businesses in the field will be diversified and prosper in the future.