The Internet extends markets beyond State jurisdiction




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The Internet extends markets beyond State jurisdiction


Insofar as the Internet creates the means whereby intermediation can extend beyond the geographical boundaries of each country, it might appear obvious that markets will largely be able to evade State regulations. However, one could be dubious about: (i) the fact that technical means are sufficient to create a world market and (ii) even if such a world market were to exist, the inability of the States to monitor it.

(i) The creation of a world market is often seen as unlikely, even in the medium term, for the following reasons:



  • the obstacle of language and culture: the strength of this argument varies greatly depending on the customer segments and the products being considered. It is probable that, in the case of the customers targeted in the short term by electronic commerce17 (individuals with a computer connected to the network) and if certain specific products are left out, cultural resistance will be limited18;

  • the efficiency of local markets: one might indeed estimate that, for daily purchases, the Internet is of little use - why shop on the network if it is more effective to go round the corner or to a department store? This argument confuses the selling process (order, payment, delivery, etc.) with the commercial intermediation as a whole which is principally constituted by the pairing19 of a demand (willingness to pay) with a supply (the product).

(ii) Assuming that extended markets could develop on the basis of the Internet, would states be able to regulate them? Such monitoring would be difficult to implement, less for technical reasons (which are nevertheless often put forward as the main obstacle) than for political reasons:

at a technical level, although, admittedly, every time a new technique is introduced, the police spend more time than the criminals to mastering it, one cannot see why, in the long term, legal procedures and police resources could not adapt to digital networks and use the methods of observation and data-processing they allow (perhaps there is more to fear in such new methods curtailing individual freedom);

at a political level, the Internet development is in keeping with the current trend towards free markets;

by demonstrating the particular regulations of each state and their inconsistency, the Internet strengthens the position of federal structures in their unifying strategy for cutting down on such local rules and regulations;

by extending international trade, the Internet confronts regulations, allows them to be compared and sets up a kind of competition between them. The economies of states with restrictive regulations are therefore handicapped, which, in the long term, makes such states less prone to impose regulations;

by acting as an initiator and model, the Internet is granted a kind of extraterritoriality. To enable it to develop and serve as an example, states are willing, for example, to remove taxes applicable to operations carried out through it20.
It is therefore likely that the development of the Internet will go hand in hand with the setting-up of extended markets which states will be increasingly incapable of regulating. They will still retain the possibility of isolating their country from the rest of the world economy, but not that of supervising markets that will be evading their control.


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The Internet extends markets beyond State jurisdiction

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