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Collective Consuming: Consumers as Subcontractors on Electronic Markets

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  • Dolfsma, W.A.

Abstract

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.

Suggested Citation

  • Dolfsma, W.A., 2005. "Collective Consuming: Consumers as Subcontractors on Electronic Markets," ERIM Report Series Research in Management ERS-2005-020-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
  • Handle: RePEc:ems:eureri:1932
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    Cited by:

    1. Slawomir Czarniewski, 2014. "Types of Competition in the Market in the Context of New Value for Customers," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(12), pages 259-269, December.
    2. Dolfsma, Wilfred, 2005. "Towards a dynamic (Schumpeterian) welfare economics," Research Policy, Elsevier, vol. 34(1), pages 69-82, February.
    3. Wilfred Dolfsma, 2004. "The Process Of New Service Development — Issues Of Formalization And Appropriability," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 8(03), pages 319-337.

    More about this item

    Keywords

    consumers; consumers as subcontractors; electronic; electronic markets; transaction cost;

    JEL classification:

    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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