What if social networks made markets virtuous?
This post is a contribution by Sophie Bruand, founder of QUIP, this post was originally published on her blog (http://blog.quip.fr).
Social networks, by allowing their users to speak freely about various businesses, brands, products and services; going so far as to allow lobbying groups to form has changed the power dynamic between economic agents.
Before social networks, the relationship between businesses – particularly multinationals—and consumers was asymmetrical. Multinationals had information control and media access on their side, consumers had nothing—they were relegated to being simple receptors of information, at times propaganda of the former. The conditions for pure and perfect competition in classical and neo-classical economy were thus violated:
- No attractiveness of markets, but an oligopoly or even a monopoly.
- No transparency of information, rather a large asymmetry that favors corporations. Consequently, this threatens optimal workings of the market of classical economics.
With social networks everything changes. By giving power back to consumers, or at least slightly tweaking the power dynamic more in their favor, social networks encourage a return to conditions for pure and perfect competition. Thus, we have gone from an unequal system of information to a system where transparency is greater and consumers are able to reestablish truth and to send their own messages with as much power as brands have. Market attractiveness is also improved as corporations have lost power and thus oligopolies are easier to control. What’s more, I feel that social networks force businesses to behave in a more virtuous way: transparency of information, dialogue with consumers, which establishes a more ethical marketplace.