FOR decades individuals and companies have been at the mercy of price fixing by region and sector. There are invisible clubs that conspire to fix artificially the prices of commodities, goods and services to the advantage of specific sectors and the disadvantage of the customer. Strictly speaking, many of these price-fixing arrangements are illegal, and many more would be illegal if they were not operated by governments.

At one end of the spectrum we have agricultural policies that subsidise the least efficient farmers and penalise the best. And as a result good food is destroyed or sold on to other markets if it does not sell at its artificially designated price. At the other end of the spectrum we have software, music, clothes, furniture and cars on sale at inflated prices. In general, the price is fixed on the basis of what the market or political system will stand.

Just fly from Britain to America and see everything from computers and cars to music tapes, CDs and food purchased on a dollars for pounds basis. That is, a PC priced at £2,000 in Britain is only $2,000 in America. The same is true for most products. Curiously, this even applies to things manufactured here and shipped to America. As travel gives more people direct access to these distant markets, to be followed by satellite TV and online services, this situation will become increasingly indefensible. Sooner or later customers will rebel and buy online at 60 percent of their locally fixed price. Of course, tax and shipping costs will close the price gap by a further 10 percent or so, but along with the delivery delay, this will be acceptable.

But there is now a new and more powerful opportunity for individuals who can gain from the leverage of the group buying. So far there are precious few real life examples, but the ones that have emerged are dramatic in the extreme and a portent of what can be done.

In America a woman was quoted $25,000 for a new car. She then went around her family and mustered orders for four more cars and went back to negotiate a price of $22,000 per car. She then went on the Net and advertised all the cars on the lot. Having secured customers for almost every car she returned to the garage and purchased almost all of its cars at less than $19,000. Everyone was happy. The garage sold close to the entire stock, and all the customers purchased cheaper cars, and of course she paid for hers through her commission. As far as I am aware this is the first online customer cartel.

Internet book, wine, computer and software stores are now established and part of a growing global economy. But these stores are just facsimiles of the real world. We now have an extension to this model for a potentially larger and far more competitive global economy. Here we face the fundamental question: what are customers prepared to pay, instead of in what quantity and at what price is the supplier prepared to sell? For the first time the customer calls the shots, and every market can become a buyer's market should we choose to exercise this new freedom to buy.

Peter Cochrane is BT Head of Research. Opinions expressed in this column are his personal views and should not be taken as reflecting BT policy or intent.

Peter Cochrane holds the Collier Chair for the Public Understanding of Science & Technology at the University of Bristol. His home page is:
http://cochrane.org.uk