INTERNET AND BUSINESS RISKS

The Internet can be compared to the plain old telephone network. Just like people, by default, can be reached by phone, Internet implies tha t computers, shortly, by default will be reachable through the net. Th is makes new ways of arranging business-to-business transactions possi ble. Digital cash, among other things, will drastically reduce the tra nsaction costs for certain cathegories of trade transactions. Related technology makes it possible for companies to cooperate easily and pra ctically through more or less temporarily integrated information syste ms. In all, these developments will cause changes in the risk environm ent of companies, and put pressure on different institutional arrangem ents. Taxes and duties predicated on the ability to control the import of goods will not be enforceable, if the good in question can be deli vered in digital form. Digital cash makes new cathegories of transacti ons economical, but probably demand that the backer of the method of p ayment is as international as the Internet. Finally, the sharper compe tition that follows on lowered transaction costs will make far-reachin g demands on the efficiency and speed of the mechanisms for reallocati ng capital and physical resources.