Collective Consuming: Consumers as Subcontractors on Electronic Markets
2005-04-03
Research Paper
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In this article, contrary to popular belief, it is argued on the basis of Transaction Cost Economics that consumers will become dependent subcontractors on electronic markets. Consumers invest time and effort building up a relation with a producer or e-tailer; an investment that is idiosyncratic. The producer or e-tailer only needs to invest in generic assets that enable him to automate the process of collecting and processing customer information she needs to differentiate products and discriminate prices. As subcontractors consumers face high switching costs and are thus dependent on producers or e-tailers. Virtual communities of consumers that organize countervailing power will not mitigate this tendency.
Keywords
Classifications using
Journal of Economic Literature (JEL) Classification System
- O32 : Management of Technological Innovation and R&D
- M : Business Administration and Business Economics; Marketing; Accounting
- M13 : New Firms; Startups
- M31 : Marketing
Automatically Extracted Terms
- consumer
- market
- intermediary
- information
- product
- price
- internet
- relation
- investment
- party
- community
- price discrimination
- subcontractor
- customer
- discrimination
- transaction
- producer
- theory
- process
- internet communities
