COINLink: the impacts of an EDI network on the automobile dealership and lending industries

Abstract

COINLink is an independent electronic data interchange (EDI) network that can connect a large number of automobile dealers and lenders. Historically, most dealerships have remained in a captive relationship with their auto makers' finance companies. COINLink has the potential to create an electronic common market of the $280 billion installment credit industry for automobiles. To evaluate the impacts of new technologies like COINLink, the author argues that traditional efficiency criteria are not sufficient. Instead, he introduces Porter's (1980 and 1985) frameworks of a value chain and the five forces of industry competition. Using these models, he enumerates the likely impacts of COINLinks to alter the scope of competition among the dealers and lenders. Coin's success in the EDI market will depend on the industry accepting its proposal for a uniform network standard. Additionally, Coin must continue to innovate on system enhancements and exploit the asset complementarity from its strategic partnerships with major network vendors and users. >