From David Beaulieu,
Your Guide to Landscaping.
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A. There are two parts to an electric dog fence: a wire that is buried along the perimeter of the "fenced in" area and a pet-collar with a receiver. For more on electric dog fences, please see below....

The underground wire transmits a signal that makes the pet-collar beep, if the pet comes too close to the electric dog fence perimeter. A mild electric shock will also be applied.

Pros of Electric Dog Fences:

• Aesthetics: with electric dog fences, you are not forced to erect a style of fencing that, while effective for keeping pets at home, may not complement your landscape design very well.
• Because you are not erecting anything, per se, with electric dog fences, you don't have to worry about the zoning laws or inspection codes to which you'd be subject, if you were to erect physical fencing.

Cons of Electric Dog Fences:

• Pet fencing often doubles as security fencing to some degree, keeping intruders (human and canine alike) out of your yard and pets in your yard. Tall chain-link fencing, for instance, will perform this dual role. Electric dog fences, however, are purely one-way, so they won't keep out intruders.
• Electric dog fences are not fool-proof: the mild shock may not be sufficient to keep Rover from roving, if the incentive to break free is great enough.
• When pets do ignore the shock and cross electric dog fences, there is a disincentive (in the form of the shock) for them to return.

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