Reinventing the Bazaar Chapter 4

A.  A passage that I found interesting was, "apparently homogeneous items often are not actually homogeneous: it matters where you buy them" (page 50). This interested me because I experience this almost everyday it seems like. I admit that I am guilty of buying a brand name item when I could easily get the exact same thing for a much lower price. Though, there are times when I do find myself searching for the best price. I do this a lot when I'm buying books for school. I don't really know what makes books any different than a expensive brand name coat. McMillan states that this becomes a problem when online shopping is involved mostly because the buyers cannot see the quality of the item they are buying. This is interesting because I assume for most people that price and quality go hand in hand.

B.  When referring to transaction costs McMillan means the expenses of trying to find a product that a buyer is unable to find. This happens when buyers are trying to find products for the best prices and are traveling from store to store to do so. Transaction costs are high when a buyer cannot obtain the correct information, and low when the information is available to the buyer. Transaction costs also occur when shopping online when a buyer is insuring that their product will get to them in a timely manner and in good condition.

C. When information flow is imperfect the market will run inefficiently. When this happens buyers are at a disadvantage if they do not have full access to information. Lack of information may cause buyers to question whether or not they are making quality purchases. That lack of information buyers have in turn may effect the sellers if the buyers decide against making a purchase. Though it could greatly work to the sellers advantage if the buy does decide to make the purchase. Too much information could give the buyer an advantage as well. If the buyer knows how much a product should cost they are in a better position to make deals with the seller for a lower price. As you can see, when the buyer has too much information the seller is at a disadvantage.