Market-enabling Internet agents

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Abstract:

The growth of the Internet offers a vision of ubiquitous electronic commerce. A particularly exciting feature of Internet commerce is the ability to automate the search for price or other product information across multiple suppliers by using an “agent” to retrieve the relevant information. The use of such agents has the potential to dramatically reduce buyers’ search costs. We argue that such agents effectively transform a diverse set of offerings into an economically efficient market and that their use should therefore be analyzed in these terms.
In this paper, we present a simple model of the competitive effects of agents used to support purchasing. The model suggests that agents can be successful for diversified goods but resisted for commodities and near-commodities. We illustrate our model by analyzing the situation of current electronic commerce ventures on the Internet.