How the Internet Affects Small Business

The Internet is a double edged sword for small retailers, says The Economist, providing a wider audience for niche products while giving big advantage to companies with economies of scale. One one hand, “The internet acts mainly as a mechanism that reduces consumers’ costs of acquiring information about products and prices.” The result is open price wars won by the biggest companies.” On the other hand, “If people want lower prices, then bigger shops and chains, with their economies of scale, may be the ones that do best. But it is equally possible that a small shop meeting a very specific need might see its market share expand because more people who want what it provides (cult records or fan fiction, for instance) learn of its existence.”