how internetis helpfull to save consumers from exploitation of sellers ?
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he Internet is one of the most important innovations of the 20th century This paper discusses sources of consumer surplus that are likely to exist due to the
types of sites we see being used online and points to research that quantifies the
consumer gains from use of the Internet. I also discuss the problems involved in measuring all the gains from use of the Internet. Websites that make traditional
sales generate consumer surplus through availability variety and convenience
to the consumer. Price comparison sites allow consumers to quickly and easily
gather price quotes from a variety of sellers, which results in the consumer pay- ing a lower price. Information sites provide information that the consumer can use to pick an appropriate activity or execute a task more efficiently; often these
sites save consumers time in mundane taskssuch as buying tickets, checking the weather, or getting driving directions. Likewise, matching sites (such as eBay)
improve transactions by hugely increasing the quality of the match compared
to the local garage sale. While it's clear the Internet increases price competition
so that consumers pay less for products, it also improves daily life by increasing the variety quality and availability of products and information. These gains are particularly useful to people with high transactions costs (busy, rural) and
uninformed people. Of course there are existing and potential attempts by firms
to hold on to their profits in the face of consumers' lowered search and transac- tion costs. Corporate responses include lobbying for legal protection, altering product design, restricting the information shared with consumers (obfuscation),
and engaging in differential pricing.
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