Amazon.com which is headquartered in Seattle, Washington is the worlds largest online retailer. In recent months there has been hints that amazon.com will increase its subscription service, amazon prime, $20 to $99 dollars a year. Views on the increase have been divided, some experts believe that the increase will decrease subscriptions, while some believe that the increase of subscription price will have unchanging effects. In the article Mark Mahaney suggest that the increase in subscription fees will actually the profits for the firm. He has monitored the stock prices for amazon and has notice no signs of a decreasing trend.
Since amazon is a retailer the true purpose of the firm is to trade goods and services from the seller, or producer, to the consumer. Amazon.com is going to increase the cost of its services to the consumer and still make a profit. This suggest that amazon.com is essential to the functioning of the network. The importance of amazon.com to the network is indicated by the fact that is there was another trader who could replicate their function completely, amazon.com could not continue to make a profit. Amazon.com is able to improve its payoff by undercutting is competitors and still sell the goods to the buyer. Amazon.com in the current market is an essential trader that has and economic payoff.