Using a spatial competition model, this paper considers the conditions under which a monopoly manufacturer will introduce an internet distribution channel (e-channel), and its effect on consumer surplus and social welfare. We find that the e-channel will be introduced only if the consumers' travel cost is high and the delivery cost of e-channel is low. Second, the social welfare will be improved if the delivery cost is low. Finally, Pareto efficiency can be realized even when the delivery cost is high.
