Nature of the Firm

question 43

Essay

Nature of the Firm. Amazon.com is a leading online retailer of books. The company also sells CDs, videotapes, audiotapes and other products over the Internet, and on proprietary online services like America Online. Amazon.com has a limited operating history upon which to base an evaluation of its business and prospects. The company's prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets such as online commerce.
A. Critics of Amazon.com allege that the company is "merely" an information processing device for bringing together book wholesalers and customers. Would Ronald Coase agree that this is a shortcoming of Amazon.com?
B. In what way must Amazon.com be efficient if it is to enjoy long-term success?

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Definitions:

Consumer Socialization

The process by which individuals acquire skills, knowledge, and attitudes relevant to their functioning as consumers in the marketplace.

Skills

The abilities and knowledge that enable an individual to perform specific tasks effectively.

Attitudes

Attitudes reflect how an individual feels about something, encompassing their beliefs, feelings, and behavioral intentions toward people, objects, or ideas.

Traditional Family

A family structure typically defined as a heterosexual couple living with their biological children.