Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 527: ICT and Household-Firm Relations

Assar Lindbeck () and Solveig Wikström ()
Additional contact information
Assar Lindbeck: The Research Institute of Industrial Economics, Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden
Solveig Wikström: School of Business, Postal: Stockholm University, SE-106 91 Stockholm

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 transactions. We point out that this will result in various counter-reactions by firms, including 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 Labor; Market Powers; Competition

JEL-codes: D13; D40; D80; L10

22 pages, December 29, 1999

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