The logic of collective consuming: Consumers as sub contractors on electronic markets

Wilfred Dolfsma*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

5 Citations (Scopus)

Abstract

In this article, contrary to popular belief, it is argued on the basis of transaction cost economics that consumers will become subcontractors on electronic markets. The effects of this tendency counter the benefits that might accrue to them as a result of product differentiation and price discrimination by firms, and is in actual fact an inescapable part of electronic markets, given the nature of the products and market mechanisms one should expect. Consumers invest time and effort building up a relation with an e-tailer; an investment that is idiosyncratic. The e-tailer only needs to invest in generic assets that enable him to automate the process of collecting and processing customer information needed in order to differentiate between products and discriminate between prices. The consumer becomes a dependent subcontractor.

Original languageEnglish
Pages (from-to)832-839
Number of pages8
JournalInternational Journal of Social Economics
Volume31
Issue number9
DOIs
Publication statusPublished - 1 Sept 2004
Externally publishedYes

Keywords

  • Consumers
  • Electronic commerce
  • Transaction costs

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