Complete Research Paper from attached feedback

Executive Overview

EXECUTIVE OVERVIEW Issues and Opinions

SIX MYTHS OF INFORMATION A N D MARKETS:

INFORMATION TECHNOLOGY NETWORKS,

ELECTRONIC COMMERCE, A N D THE BATTLE FOR

CONSUMER SURPLUS

Varun Grover and Pradipkumar Ramanlal Page 465

According to conventional wisdom and economic theory, the internet (and similar infor- mation technology networks) w i l l dramatically lower the transaction costs of doing busi- ness and increase competition, with the result that consumers w i l l benefit. However, this is only in theory. In practice, suppliers can enact outcomes beneficial to themselves, rather than to consumers. For instance, a conventional belief is: product customization, enabled by IT networks, would benefit buyers (Myth #1). However, the authors, Grover and Ramanlal, show how, in practice, it is feasible for sellers to enact the following contrasting outcome: product customization, enabled by IT networks, could allow sellers to exploit buyers (Counter-myth #1). Grover and Ramanlal draw on traditional economic theory and lucid examples to explain six myths and counter myths. The remaining five are:

Myth #2: Increased outsourcing, enabled by IT networks, would lower prices and benefit buyers

Counter-myth #2: Increased outsourcing, enabled by IT networks, could reinforce the seller's monopoly by sustaining higher prices.

Myth #3: Open IT network architectures lower prices and benefit buyers as dependence on supplier hierarchies is reduced.

Counter-myth #3: Open IT network architectures could be exploited by suppliers to create captive buyer networks that can sustain higher prices.

Myth #4: Linking multiple market centers using IT networks would result in consolidated markets that benefit the buyer.

Counter-myth #4: Linking multiple market centers using IT networks could result in fragmented markets that benefit the supplier.

Myth #5: Expanding the customer base for a product using IT networks would result in greater benefits to buyers.

Counter-myth #5: Expanding the customer base for a product using IT networks could allow suppliers to exploit buyers.

Myth #6: A low-price guarantee by suppliers in environments enabled by IT networks would result in markets that benefit the buyer.

Counter-myth #6: A low-price guarantee by suppliers in environments enabled by IT networks could result in price fixing and higher prices for the buyer.

W h o will prevail: buyers or suppliers? The authors do not say, but buyers and suppliers can read this article as a blueprint for action (and counteraction).

Allen Lee Editor-in-Chief

MIS Quarterly Vol. 23 No. 4/December 1999 Ixiii