Banking and Finance Law | Law | Law and Society
For centuries, the trend has been toward longer and more complex intermediation chains in a wide array of contexts. The growing length and complexity of intermediation chains were both the by-products and drivers of ever-greater globalization and specialization. In recent years, however, there has been a shift in the opposite direction. In a variety of markets, suppliers and consumers increasingly transact directly with one another. Many of these developments have arisen from technological innovations that reduce search costs and other hurdles to transacting, like verifying information and negotiating the terms of a transaction. Airbnb, Etsy, and their kin, for example, so lower transaction costs as to enable a diverse range of transactions to occur that would have been unimaginable a mere decade ago. Bedrooms that previously sat empty are now regularly occupied by a rotating cast of short-term visitors; artisans can now make a living by reaching would-be clients in faraway places.
Other forces that seem to be contributing to the rise of direct transactions are changing consumer preferences and growing appreciation for the ways that the nature of the intermediation chain separating a consumer and a producer affects the nature of the goods produced. For example, the dramatic resurgence of farmers' markets seems to reflect growing consumer demand for foods that are locally and organically produced and consumer appreciation of the fact that the vegetables available at a farmers' market are different than those found at the average grocery store.
The Future of Direct Finance: The Diverging Paths of Peer-to-Peer Lending and Kickstarter,
Wake Forest L. Rev.
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