The Internet and the Consumer: Countervailing Power Revisited

The Internet is a tool with the potential to enable consumers to effectively participate in collective bargaining in the marketplace. The purpose of this paper is to address the viability of the concept of countervailing power in the Internet era. First, some theoretical perspectives on how on-line consumer networks have the potential to be a new source of countervailing power are introduced. Next, the potential for consumer countervailing power in the Internet era is discussed. A case study that illustrates the viability of the propositions is then presented. Finally, implications and limitations of the paper are briefly discussed: if the potential for countervailing power can be established, then the circumstances under which collective bargaining would occur and the determinants of its outcome would be of vital interest to consumer economists and policy makers.