Pandoras Box: Does Electronic Commerce Increase the Optimal Amount of Fraud?

Close business relationships are important in the food industry. However, the introduction of electronic commerce has emerged as a fundamental challenge to these relationships. In particular, retailers who start procuring private label food products in electronic auctions risk the termination of the relationships with their suppliers thus losing the value derived from these relationships. Instead, they move their focal interest towards single, unrelated transactions. The authors argue that this development increases the optimal amount of fraud in electronic commerce. In this context, they analyze the occurrence of opportunism.