Unformatted text preview: heir relative bargaining power.
In Digital Markets, consumers and suppliers can ‘’see’’ the prices being
charged for goods, and in that sense digital markets are said to be more
‘’Transparent’’ than traditional markets. KEY CONCEPTS IN E-COMMERCE; DIGITAL MARKETS AND DIGITAL GOODS
KEY For example: Until Automobile (Auto) retailing sites appeared on the Web,
there was a pronounced information asymmetry between auto
dealers and customers.
Only dealers knew the manufacturers’ prices, and it was difficult
for shop around for the best price.
Auto dealers’ profit margins depended on this asymmetry of
Today’s consumers have access to a legion of Web sites providing
competitive pricing information, and 75% of U.S Auto buyers use the
Internet to shop around the best deal.
Thus, the Web has reduced the information asymmetry surrounding an
auto purchase. The Internet has also helped businesses seeking to purchase
from other businesses reduce information Asymmetries and locate better
prices and terms.
prices KEY CONCEPTS IN E-COMMERCE; DIGITAL MARKETS AND DIGITAL GOODS
KEY Digital Markets are very flexible and efficient because they operate with : Reduced search and transaction costs ,
Lower Menu Costs (Merchants’ costs of charging prices),
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- Spring '11
- web sites, Internet business models