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ConclusionsFiled Under: General

At the end of the day following the introduction of Ecom there could be fewer intermediaries in a vertical value chain. However, vertical value chains have lost their attractiveness in a time of increasing returns based on scope-wise innovations in product. Products in this setting of Ecom offer sequential competition. Firms and their customers coordinate their expectations based on the next versions of products. Similarly, firms that are competing in sequence or at the same time must coordinate their expectations on each other because products from their stables must fulfill obligations of interoperability, as well as satisfy mutually agreed upon restrictions on quantity and prices. Coordination amongst producers too affords a cascaded deferment of both consumption and completion of a systemic product. These two types of coordination
involve incompleteness of contracts, uncertainties and liquidity of investment. The length between production and consumption thus must create enough number of economic agents who can trade in risks, insurances, information and liquidity. The intermediaries, who in this Ecom environment are the cybermediaries, offer this service as the microstructure of market. Cybermediaries therefore emerge to fulfill this novel task. The economic-value-adding activities by these cybermediaries lengthen the circuit of

production that terminates in consumption. A lengthened circuit indicates deferred consumption and a consequent rise in capital and in profit. Ecom therefore requires possibly more quantity of intermediation and surely novel modes of mediation. Necessarily little of this novel mediation takes place along the previous value chain. Most of the novel cybermediations appear in the scope direction and away from the vertical industrial segment. The economy under Ecom increases in the scope but not through Chandlerian large multidivisional firms. The economy increases through highly differentiated and variegated cybermediaries who lengthen the circuit of capital and as a consequence of increasing the riskiness of a business increase the profit. This profit does not arise in technological innovations particularly of the kind that increase efficiency. Contrarily this profit is strategic because the cybermediaries arrange and then rearrange the configurations of a market and thus through bringing about surprise the cybermediaries reap enhanced profit.

Taken From : Digital Economy – Impacts, Influences and Challenges