《《6 Transaction innovation and the role of the firm》.pdf

TRANSACTION INNOVATION AND THE ROLE OF THE FIRM Daniel F. Spulber ABSTRACT Advances in computers and telecommunications and the development of the Internet have been applied to develop new transaction technologies that lower transaction costs. By lowering transaction costs, these changes in transaction technology make possible transaction innovation, that is, the development of new types of market transactions. Transaction innovation changes not only business methods and organizational design, but the content of transactions and the way that markets are organized. I consider the impact of transaction innovation on the role of the firm in various economic activities including market clearing, auction design, price adjustment, quality certification, and agency . 1. INTRODUCTION Advances in computers and telecommunications and the development of the Internet have been applied to develop new transaction technologies . Changes in transaction technology reduce the costs of conducting business with the firms customers and suppliers, as well as the costs of interaction within the organization. By lowering transaction costs, innovations in transaction tech- nology make possible transaction innovation, that is, the development of new types of market transactions . Transaction innovation refers to the content of transactions rather than the technology of transacting . Thus, transaction The Economics of the Internet and E-Commerce, Volume 11, pages 159-189. Copyright © 2002 by Elsevier Science Ltd . All rights of reproduction in any form reserved