Scandinavian Working Papers in Economics

Seminar Papers,
Stockholm University, Institute for International Economic Studies

No 677: ICT and Household-Firm Relations

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: This paper discusses how ICT and emerging electronic commerce in consumer products influence the relative efficiency in production of households and firms, resulting in changes in the division of tasks between these two types of agents. Increased information and competence of households, in combination with stiffer competition among firms, will also increase the power of households relative to firms, at least in a long-term perspective with free entry of firms. Households will also get more powerful channels to influence firms directly, i.e., beside the indirect influence via market trans-actions. We point out that this will result in various counter-reactions by firms, includ-ing increased differentiation of products and prices. Finally, we briefly consider various limitations and obstacles to electronic commerce in a long-term perspective.

Keywords: information technology; household production; division of labour; market powers; competition

JEL-codes: D13; D40; D80; L10

29 pages, October 1, 1999

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