07-LECTURE NOTES 7 E - COMMERCE DIGITAL MARKET AND DIGITAL GOODS

In digital markets consumers and suppliers can see

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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, For 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 information. Today’s consumers have access to a legion of Web sites providing Today’s competitive pricing information, and 75% of U.S Auto buyers use the Internet to shop around the best deal. Internet 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), Price discrimination, Ab...
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