In this article, contrary to popular belief, it is argued on the basis of Transaction Cost
Economics that consumers will become dependent subcontractors on electronic markets.
Consumers invest time and effort building up a relation with a producer or e-tailer; an
investment that is idiosyncratic. The producer or e-tailer only needs to invest in generic assets
that enable him to automate the process of collecting and processing customer information she
needs to differentiate products and discriminate prices. As subcontractors consumers face high
switching costs and are thus dependent on producers or e-tailers. Virtual communities of
consumers that organize countervailing power will not mitigate this tendency