Network Economy Francesca
Ebays Network Economy
The Network Economy is the lessening of centralised companies and organisations to connections with other companies when groups have the need to connect. Most business moved from the making of things being distributed to the making of team like behaviour. Are you with Windows or are you with Mac. (Rivkin, 2004) Network Economy is not looking at what to produce but creates value by, connecting us, reducing costs and transmitting information. (Liebowitz, 2002) Ebay is working as a Network Economy because it is easy to connect people in a virtual space to make the network grow. Products need to be posted once for it to be seen by many, taking out the mass production needed to sell to groups. Uses can become apart of the Ebay network free, making it more valuable because the less something costs the more valuable it becomes in a Network Economy. (Rivkin, 2004) Ebay gives uses in a network the ability to search for 100, 000 things, transmitted to uses all over the globe with out time, space or employees, which may obstacle to process and make it slower.
Products need to be posted once to be seen by many in the Ebay Network, making distribution cost less. Persian carpets became less valuable when machines made them. (Rivkin, 2004) In a Network Economy such as Ebay the products stay the same however they are not remade for distribution. They are made only once and virtually transmitted to all uses that search for it. Carpets may have lost their value because of how making them has changed and shops filled with unsold dusty carpets would be unappealing to most. But in a Network Economy this is not so because they are only made if requested and images of things are digitally transmitted. Distributers are not being burdened with stock bought but not sold making Ebay is fundermental for Internet Commerce because it saves distributors space and money.
In a Network Economy what is free holds more value. (Rivkin, 2004) It is free to be apart of the Ebay Economy. However, it is only valuable when the proportion of the people using it out ways the proportion of utilities. For example the owner of fax machines benefit from the fact that there are lots of other people with fax machines. If there where no other fax machines you could not send a fax to anyone. In Ebay, if there where no users collaborating with each other there would be no trade. The uses are present in the Network willingly for free. Due to the fact that all uses are their for free makes Ebay a fundamental Economic basis for Internet Commerce because uses are present within the network, free.
The Network Economy in Ebay can be seen as a basis for Internet Commerce because it saves money for distributors and if free to be involved in the Network Economy. Products need to be posted once, when showed to many making the process cost effective. Ebay promotes the free because to be apart of the network one pays nothing making it most valuable in the Internet commerce vision.
References: