Digital village: predatory disintermediation

Abstract

This article focuses on the conception and usability of "disintermediation" in present day competitive business world and specially through the Internet. Disintermediation has been defined as the withdrawal of funds from banks and savings institutions in order to invest them in government securities, commercial paper, etc. paying higher rates of interest. The author emphasizes on the usability of this in e-commerce in the form of symbiotic disintermediation. He considers both positive and negative aspect of its implication but also clarified with some data that the positive consequences are much greater than the negative one. He describes two principles of symbiotic disintermediation, first of which suggests that when the advantage of the disintermediation is predicated upon parsimony, economies of scale, or the novel use of a publicly accessible technology infrastructure, one cannot create formidable barriers to effective competition. The second principle suggests that an instance of symbiotic disintermediation can only reach stability and maintain viability if the value added is proprietary, inherently unique, difficult to replicate, or legally protected.