It has been more than two decades since internet boosted its potential and now it can be considered a fearful competitor of many mortal businesses such as retailers, advertisers or even intermediaries. It is also known that the advent of internet in our daily life has also changed many systems’ structures such as the transaction costs in B2B, B2C or even the C2C models. Internet has abolished geographical boundaries, connected people and facilitated information flow. We now live in a world that everything happens in real time, which also brought changes in economic equilibriums, marketing strategies as well as speculation margins. Amazon, Google, EBay has revolutionized the custom of traditional shopping, increasing consumer’s addiction to consumption by differentiating products in every possible and imaginable manner.
Well, this work’s attempt is to shed a light on the dynamics of this evolution, to acknowledge the main players and see how equilibrium can be set and re-set incessantly in a very volatile market due to its lack of physicality (i.e there is a physical gap between supplier and demander at the purchasing moment, therefore is very difficult to build customer loyalty). The example used to extrapolate some statistical evidence is linked to group buying e-commers such as coupon companies. It is the case of Groupon.com, the daily offers company with the highest growth rate among web companies since 2008 .
The first part of the study is a theoretical literature review mainly arranged to give a theoretical backup to the empirical analysis that will follow. It seems that there has been a lot of field research on the topic. I suppose the reason is the worryingly fast growing pattern of these virtual business realities. The first chapters aims to concatenate the main features of these new business models, trying to understand the differences between them and the traditional ones which offer the same products or services- also the reasons why “normal” firms are greatly suffering market share losses. The third chapter instead is totally dedicated to online intermediaries since they seem to be the economic agents to have better fit in this new giant virtual marketplace. Different types of intermediaries obviously play different roles in the business arena and also provoke different welfare effects in terms of costumer’s wellbeing. For such reasons the interesting part here is their game strategy while intermediating either information or services.
Table of Contents
- Part One - Theoretical analysis
- Introduction
- Chap I. Internet Economics
- 1.1 Towards new consuming channels: E-shopping or traditional retailing?
- 1.2 Trust in E-Commerce Customer Relationships
- 1.3 Reputation within the online market frame: The case of a C2C online auction market
- Chap II. Information and reputation in intermediated product markets
- 2.1 Intermediation and information
- 2.2 Infomediaries and competition in search markets
- 2.3 Intermediation and reputation in online markets
- Chap III. Markets with intermediated goods
- 3.1 Intermediaries as dealers
- 3.2 Intermediaries as matchmakers
- 3.3 Intermediaries as two-sided platforms
- 3.4 Double Marginalization in vertical relation
- 3.5 Coupon Economics: A product of economic recession?
- Conclusions
- Part Two
- Chap. IV E-Tailing: The online shopping pandemic
- 4.1 Traditional retailing and/or e-tailing: Complements or substitutes?
- 4.2 A case of e-retail complementarity to traditional commerce: Groupon.com
- 4.3 Finding the “fake” Bertrand equilibrium price
- 4.4 Efficiency and Customer satisfaction
Objectives and Key Themes
This dissertation aims to analyze the dynamics of the evolution of e-commerce, focusing on the role of online intermediaries and their impact on market equilibrium. It uses Groupon.com as a case study to extrapolate statistical evidence and examine intermediary behavior. The theoretical framework draws upon literature on internet economics, information intermediation, reputation systems, and two-sided platforms.
- The impact of the internet on traditional retail models and consumer behavior.
- The role and different types of online intermediaries (dealers, platforms, infomediaries, trusted third parties).
- The influence of reputation and trust in online markets.
- The dynamics of competition in intermediated markets, particularly in the context of group buying.
- The economic and strategic aspects of group-buying infomediaries like Groupon.
Chapter Summaries
Chap I. Internet Economics: This chapter explores the impact of the internet on the economy, examining theories on lower inflation and the impact of internet adoption as a cost-reducing technology. It highlights the role of online intermediaries (OIs) and their potential for monopolistic behavior due to increasing returns to scale and network effects. The chapter concludes by posing questions regarding how OIs exploit their functions and the perception of user costs and profits within the infomediary model.
Chap II. Information and reputation in intermediated product markets: This chapter analyzes the importance of information and reputation in intermediated markets. It examines models of consumer attention, competition among advertisers, and the role of infomediaries as information gatekeepers. The chapter further explores how intermediaries can act as certifiers of product quality and reputation, impacting consumer trust and firm behavior. The case of tour operators providing hotel ratings is used as an example.
Chap III. Markets with intermediated goods: This chapter categorizes the different roles of online intermediaries: dealers, platform operators, infomediaries, and trusted third parties. It examines models of intermediated trade, comparing it to decentralized markets and exploring when intermediation adds value. The chapter analyzes the behavior of intermediaries as dealers versus platform operators, and discusses double marginalization in vertical relationships, using the example of the debit card industry. Finally, it examines the economics of coupon businesses as a response to economic recession.
Chap. IV E-Tailing: The online shopping pandemic: This chapter investigates the relationship between e-tailing and traditional retailing, exploring whether they are complements or substitutes. It uses empirical data from Groupon Italy to analyze the success of group-buying infomediaries. The chapter delves into the Groupon business model, analyzing the strategic interactions between Groupon and its partners ("Partners"), and Groupon and its users. It examines the price negotiation game between Groupon and its partners, using a modified Bertrand model to analyze market power. The chapter also explores the price elasticity of demand for different product categories and the relationship between efficiency, profits, and consumer satisfaction within the Groupon model.
Keywords
E-commerce, online intermediaries, infomediaries, reputation systems, trust, group buying, Groupon, two-sided platforms, network effects, price competition, Bertrand model, price elasticity, consumer behavior, market equilibrium, double marginalization, vertical integration.
Frequently Asked Questions: A Comprehensive Language Preview
What is the main topic of this dissertation?
This dissertation analyzes the dynamics of e-commerce evolution, focusing on the role of online intermediaries and their impact on market equilibrium. It uses Groupon.com as a case study to examine intermediary behavior and uses a theoretical framework drawing upon internet economics, information intermediation, reputation systems, and two-sided platforms.
What are the key themes explored in the dissertation?
Key themes include: the internet's impact on traditional retail and consumer behavior; the roles of various online intermediaries (dealers, platforms, infomediaries, trusted third parties); the influence of reputation and trust in online markets; competition dynamics in intermediated markets (especially group buying); and the economic and strategic aspects of group-buying infomediaries like Groupon.
What are the main parts of the dissertation?
The dissertation is divided into two parts. Part One focuses on theoretical analysis, covering internet economics, information and reputation in intermediated markets, and markets with intermediated goods. Part Two delves into e-tailing, using Groupon.com as a case study to analyze the relationship between e-tailing and traditional retailing, and the strategic interactions within the Groupon business model.
What specific topics are covered in each chapter?
Chapter I (Internet Economics): Explores the internet's economic impact, the role of online intermediaries, and potential monopolistic behavior. Chapter II (Information and Reputation): Analyzes the importance of information and reputation in intermediated markets, focusing on infomediaries as information gatekeepers. Chapter III (Markets with Intermediated Goods): Categorizes different intermediary roles and examines models of intermediated trade, including double marginalization. Chapter IV (E-Tailing): Investigates the relationship between e-tailing and traditional retailing, using Groupon.com as an empirical case study to analyze group-buying infomediaries and their strategic interactions.
What methodologies are used in the dissertation?
The dissertation employs a combination of theoretical analysis, drawing on existing literature in internet economics and related fields, and empirical analysis, using data from Groupon Italy to examine the success of group-buying infomediaries and test hypotheses regarding market power and consumer behavior. Modified Bertrand models are used to analyze price competition.
What are the key findings or conclusions of the dissertation (as previewed)?
The preview suggests findings related to the impact of online intermediaries on market equilibrium, the strategic behavior of group-buying platforms like Groupon, the interplay between online and offline retail models, and the importance of reputation and trust in online transactions. Specific conclusions are not explicitly stated in the preview but are implied through the chapter summaries and objectives.
What are the keywords associated with this dissertation?
E-commerce, online intermediaries, infomediaries, reputation systems, trust, group buying, Groupon, two-sided platforms, network effects, price competition, Bertrand model, price elasticity, consumer behavior, market equilibrium, double marginalization, vertical integration.
Who is the intended audience for this dissertation?
The intended audience is likely academics and researchers interested in e-commerce, internet economics, and the role of online intermediaries. The structured format and in-depth analysis suggest a focus on a professional academic readership.
- Quote paper
- Marsida Fani (Author), 2012, A Novel Case of Group Buying Infomediary. Groupon.com, the fastest growing web-company, Munich, GRIN Verlag, https://www.grin.com/document/365647
