ECON 106T Chapter Notes - Chapter 1: Yelp, Ebay, Hulu
Document Summary
Platforms control many aspects of exchange: online firms have lots of information about customers, they can also control what participants know about the product, the market and each other"s. Examples: letting participant monitor each other (e. g. yelp), reputation mechanisms (e. g. ebay), anonomizing interactions (e. g. hotwire), market rules (e. g. google ad auctions), structuring search (e. g. facebook), how people see prices (e. g. bing travel). Experience good: the quality is known after consumption: what is today"s ny times worth, how good is this iphone app, all information is experience good! Strategies: reveal parts of information (e. g. free song, Amazon"s look inside : given temporary access to information (e. g. put on hulu, promotional pricing (e. g. low prices for new subscribers, building a brand/reputation (e. g. ny times, testimonials (e. g. trip advisor, influential reviewers (e. g. movies, freemium (e. g. hulu, dropbox) The internet promises to lower search costs: easy to visit many stores, price comparison websites.
