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Transaction Streams: Definition and Implications for Trust in Internet-Based Electronic Commerce

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  • Subirana, Brian

    (IESE Business School)

  • Carvajal, Patricia

    (IESE Business School)

Abstract

In this paper we analyze how transactions related to the exchange of goods and services are being performed on the Internet. The adoption of electronic markets in an industry has a disintermediation potential because it can create a direct link between the producer and the consumer (without the need for the intermediation role of distributors). Electronic markets lower the search cost, allowing customers to choose among more providers (which ultimately reduces both the costs for the customer and the profits for the producer). In this paper we contend that electronic markets on the Internet have the opposite effect, resulting in our increase in the number of intermediators. We introduce transaction streams, which model how transactions are being conducted and help explain the types of new intermediators that are appearing on the Internet. We also describe mechanisms by which companies are exploring ways of extending transaction streams. To illustrate the model and validate our findings, we analyze transaction streams in the insurance industry and review associated concepts such as trust and brands.

Suggested Citation

  • Subirana, Brian & Carvajal, Patricia, 1998. "Transaction Streams: Definition and Implications for Trust in Internet-Based Electronic Commerce," IESE Research Papers D/376, IESE Business School.
    • Handle: RePEc:ebg:iesewp:d-0376
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    File URL: http://www.iese.edu/research/pdfs/DI-0376-E.pdf
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    References listed on IDEAS

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    1. Greenwald, Bruce C & Stiglitz, Joseph E, 1990. "Asymmetric Information and the New Theory of the Firm: Financial Constraints and Risk Behavior," American Economic Review, American Economic Association, vol. 80(2), pages 160-165, May.
    2. J. Yannis Bakos, 1997. "Reducing Buyer Search Costs: Implications for Electronic Marketplaces," Management Science, INFORMS, vol. 43(12), pages 1676-1692, December.
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    Cited by:

    1. Subirana, Brian, 1999. "Zero entry barriers in an NP-complete world: Transaction streams and the complexity of electronic commerce," IESE Research Papers D/387, IESE Business School.

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    Keywords

    transactions; electronic markets;

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