The Economics

The Internet provides an infrastructure that makes the steadily increasing amount of information accessible efficiently, quickly, and inexpensively. Closely connec- ted with this opportunity is the danger that the available information will over- charge the individual information seekers capability to process the information and to judge its quality. In this situation, information intermediaries can take upon the role of an expert and a guarantor of quality similar to intermediaries in markets for physical goods or finances. Thus, information intermediaries can be a trust- worthy, information processing third party, mediating between information seekers and information sources. The current technological development has created information technologies that are capable to efficiently process large amounts of information. However, the pro- vision of intermediation services necessitates a thorough examination of the basic principles underlying the economics of information intermediaries as well as a sound foundation on information technologies. The present work by Frank Rose addresses the fundamental question concerning the economics of information intermediaries by means of an abstract model. The model focuses on services that concentrate on the search and mediation of information, and identifies the essential influencing factors of the intermediarys environment. The model is then employed to investigate the impact of environmental conditions on the information intermediary on the one hand, and the optimal strategy of the information intermediary as a reaction to environmental conditions on the other hand.