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Chapter 4: Q. 2 (page 91)

It is obvious how finding a provider of cabinet-installation services can reduce a consumer's transaction costs, but how can middlemen such as Amazon also reduce transaction costs for providers of such services?

Short Answer

Expert verified

By connecting them directly with the target consumers.

Step by step solution

01

Step1. Given information 

Finding a provider of cabinet-installation services can reduce a consumer's transaction costs. Middlemen such as Amazon also reduce transaction costs for providers of such services.

02

Step2. Explanation 

Middlemen such as Amazon also reduces the transaction costs for provider of such services by directly connecting them with the consumers. They no longer need to pay commission to lots of middlemen and increase the transaction costs. They by listing themselves on Amazon get in direct touch with a large pool of target consumers.

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