Aug 05, 2022
In Welcome to the Forum
Transaction costs result when a user undertakes activities to decide whether to join a DBP and engages in specific transactions after joining. The DBP incurs transaction costs when it promotes itself to recruit potential buyers or sellers to join, curates offerings for specific customers, arranges delivery, and so on. Its production costs are all those incurred from running the platform, regardless of whether a transaction takes place (e.g., day-to-day operations, including costs of technologies that enable matching buyers and sellers, costs of IT . Infrastructure, managing personnel, monitoring performance) to ensure that transactions between buyers and sellers are completed with minimal friction. For users, cocreation activities to consummate a transaction are production Cork Bicycle shop costs, because they contribute to the creation of the final offering exchanged. We distinguish several types of transaction costs: ex-ante (before a user joins the DBP) and ex-post (after a user joins a DBP), as well as direct and indirect costs (e.g., opportunity costs such as loss of profits for actions not taken). Transaction costs arise due to three characteristics of transactions (Williamson, 1975): asset specificity, uncertainty, and frequency. Therefore, parties to a transaction incur costs to safeguard their assets, adapt to uncertainty, and for evaluating performance (Rindfleisch & Heide, 1997). In Table 2, we summarize different types of transaction costs incurred by a DBP to establish transactions or relationships with sellers. Table 2. Examples of transaction costs incurred by a DBP in the DBP–seller dyad.