We discus some welfare effects of e-commerce. First, we show that e-commerce, sometimes should be adopted by purely virtual firms, other times by firms that also have a physical shop, and other times by both. Second, we show that private investment in e-commerce can be socially excessive, insufficient, or even optimal. These results differ from others in the industrial organization literature, because they refer both to the number, and the type of firms that adopt e-commerce. We use a model developed by Mazón & Pereira (2001), where e-commerce reduces consumers’ search costs, and retailing costs, and involves trade-offs for consumers.