Washingtonpost.Newsweek Interactive, LLC

Management Science: December 1997, Providence, RlAuthor(s): Joseph BaileySource: Foreign Policy, No. 110, Special Edition: Frontiers of Knowledge (Spring, 1998), pp.184-185Published by: Washingtonpost.Newsweek Interactive, LLCStable URL: http://www.jstor.org/stable/1149292 .

Accessed: 15/06/2014 07:41

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp

.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact support@jstor.org.

.

Washingtonpost.Newsweek Interactive, LLC is collaborating with JSTOR to digitize, preserve and extendaccess to Foreign Policy.

http://www.jstor.org

This content downloaded from 91.229.229.101 on Sun, 15 Jun 2014 07:41:18 AMAll use subject to JSTOR Terms and Conditions

Global Newsstand

May 1997 elections that brought the moderate cleric Mohammed Khatami to power gave Iranians a glimpse of multiparty politics, as each of the four approved candidates was backed by a different quasi-political party. At a time when interest in the Islamic Republic is high-partic- ularly in a United States struggling to come to terms with Tehran- State Department Near East analyst Stephen Fairbanks chronicles the rise of Iran's political parties in the most recent edition of the Middle East Journal, one of the principal academic joumrnals on Middle East pol- itics. Although Khatami's election gave birth to great expectations both within Iran and without, Fairbanks makes it clear that Iran has a long way to go before it resolves the central tension between the popular push for representative government and a political philosophy that invests power in a clerical 6lite that claims divine authority.

"After 16 years of prohibition," Fairbanks writes, "there was intense interest in seizing the Khatami momentum and forming parties, before the regime tried to impose its own terms on party formation." He tells us that Iran's Article 10 Commission-the government body responsi- ble for vetting political parties-actually took some tentative steps in that direction and sanctioned the formation of a few new groups. But with names such as the Islamic Association of Athletes, the Association of Industrial Hygiene Experts, and the Association of Retirees from the Tehran Educational Department for Children with Special Needs, they are not likely to be of much consequence.

Fairbanks does not speculate on the future of Iranian politics, telling the reader only that the issue of political parties will remain "divisive." But the very fact that such division has been played out in Iran's media-in what can only be called some of the freest speech in the Middle East-is an indication that, though Iranians do not yet have their own versions of Republicans and Democrats, they are certainly making some concrete steps toward democracy.

Tarek E. Masoud

Management Science December 1997, Providence, RI

Management Science, published by the Institute for Operations Research and the Management Sciences (INmFOmfviS), is regarded by business pro- fessors as a principle source of analytical writing in the field. An impor-

184 FOREIGN POLICY

This content downloaded from 91.229.229.101 on Sun, 15 Jun 2014 07:41:18 AMAll use subject to JSTOR Terms and Conditions

Global Newsstand

tant article in a recent edition poses the question, "what impact will the

Intemrnet have on prices?" Many believe that the Intemrnet's global scope will cause prices to

become more uniform from one country to the next. Professor Yannis Bakos of the University of Califomrnia at Irvine School of Management takes this argument one step further, suggesting that the Intemrnet may in fact lower prices globally. He builds upon previous theoretical work on search theory-the study of how buyers make the economic decision to search the market for a better product or price-to show that as consumers lower their search costs by shopping online, retailers will likely face greater price competition. A neighborhood store may maintain high prices because its nearest competitor is miles away; but on the Intemrnet that dis- tance is reduced to a simple click of the mouse. As consumers use search engines and shopping agents to browse and compare dozens of competing products and retailers, they increase their chances of finding bargains. Because of lower search costs, a customer in rural Poland can order coffee directly from Italy, wine from France, or sweaters from Scotland. This may mean a shift in international trade dominated by importers and exporters to consumers and suppliers. It may also mean a boon for the transportation industry, which would ship a greater number of smaller parcels directly to customers instead of bulk orders to retail locations.

Although Bakos' article is more focused on theory than specifics, it nonetheless provides a more rigorous alternative to the visionary booster- ism peddled by industry pundits such as Microsoft CEo Bill Gates. True, the

Intemrnet's ability to reach an ever larger global community is great; indeed, forecasts for electronic commerce range from U.S.$4 billion to $10 billion by the year 2000-more than four times its current size. And if Bakos is correct, consumers may be the primary beneficiaries. But with that growth comes a host of questions: Will increasing competition reduce retailers' profit margins? What impact will current proposals for Intemrnet taxation in the U.S. Congress, as well in parliaments abroad, have on the future of electronic commerce? While government participation in electronic com- merce may boost consumer confidence about the Internet, how will regu- lation affect growth and innovation? The lack of answers to these questions reminds us that the full potential of electronic commerce remains largely unexplored. By spuming the cliches that typically domi- nate the debate over the "information superhighway," Bakos has pointed future researchers in the right direction.

-Joseph Bailey

SPRING 1998 185

This content downloaded from 91.229.229.101 on Sun, 15 Jun 2014 07:41:18 AMAll use subject to JSTOR Terms and Conditions