Scandinavian Working Papers in Economics

Seminar Papers,
Stockholm University, Institute for International Economic Studies

No 670: The ICT Revolution in Consumer Product Markets

Assar Lindbeck () and Solveig Wikström
Additional contact information
Assar Lindbeck: Institute for International Economic Studies, Stockholm University, Postal: Stockholm University, S-106 69 Stockholm, Sweden
Solveig Wikström: School of Business, Stockholm University, Postal: Stockholm University, S-106 69 Stockholm, Sweden

Abstract: New informationa and communication technology (ICT) makes consumers better informed about available products, product quality and prices, which mitigates problems of assymetry of information. The entry of firms is facilitated, competition and economic efficiency is boosted and the market powers of households is increased. Firms are likely to respond by increased product and price differentiation. There will also be considerable changes in the division of tasks between firms and households. But important obstacles to these developments are technological vulnerability, quality problems in the information of the Internet, cognitive limitations of individuals and weaknesses in the product-delivery infrastructure in connection with Internet trade.

Keywords: information technology; consumer goods markets; household production; competition; pricing; assymetric information

JEL-codes: D13; D40; D80; L10

30 pages, May 1, 1999

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