Tag Archives: information goods

economics internet network effects opportunity-cost price aggregation world wide web

The information economics of price aggregation web sites


Just as the Internet has had an impact on the market for information goods and services, it has also had an impact on the information necessary for markets to function. Perfectly competitive markets, upon which models of economics are based, require four key characteristics:

  • Many sellers.
  • Nearly identical products.
  • Easy market entry (and exit).
  • Buyers and sellers have perfect information.

The last point is possibly the most difficult. Good information is hard to come by, let alone perfect information, for both buyers and sellers. Buyers are perhaps at a disadvantage, but the rise of the online marketplace and specifically price aggregating web sites has created an interesting change.

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