Electronic markets (or electronic marketplaces) are

information systems An information system (IS) is a formal, sociotechnical, organizational system designed to collect, process, store, and distribute information. From a sociotechnical perspective, information systems are composed by four components: task, people ...

(IS) which are used by multiple separate organizational entities within one or among multiple tiers in economic

value chain A value chain is a progression of activities that a firm operating in a specific industry performs in order to deliver a valuable product (i.e., good and/or service) to the end customer. The concept comes through business management and was f ...

s. In analogy to the market concept which can be viewed from a

macroeconomic Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, an ...

(describing relationships among actors in an economic systems, e.g. a

monopoly A monopoly (from Greek language, Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none), as described by Irving Fisher, is a market with the "absence of competition", creating a situati ...

) as well as from a

microeconomic Microeconomics is a branch of mainstream economics that studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms. Microeconomics fo ...

(describing different allocation mechanisms, e.g. public auctions of telephone frequencies) perspective, electronic markets denote networked forms of business with maations: First, the topology of electronic markets may be centralized or decentralized in nature. Centralized electronic markets are hubs which often provide services to their participants. Decentralized settings involve sequential relationships within value chains which often are found when electronic messages are exchanged directly between businesses ( electronic data interchange, EDI). Second, the services provided by electronic markets may serve infrastructural or allocation purposes. Among the infrastructure services are routing, messaging, identification and partner directories whereas allocation services enable pricing process which in turn may be static or dynamic in nature. Typical implementations are catalogs, exchanges and auctions. Third, the relationships of actors involved in electronic markets may be stable or atomistic in nature. The former usually refers to classical supply chains where business collaborate during a longer period of time. In the latter case, the transaction partners are only stable for a single transaction. This is usually to be found in auction and other exchange settings. This leads to two definitions: In a narrow sense Electronic Markets are mainly conceived as allocation platforms with dynamic price discovery mechanisms involving atomistic relationships. Popular examples originate from the

financial Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of f ...

and energy industries. In a broader sense,

price discovery In economics and finance, the price discovery process (also called price discovery mechanism) is the process of determining the price of an asset in the marketplace through the interactions of buyers and sellers. Overview Price discovery is diff ...

is not critical for electronic markets. This covers all forms of electronic collaboration between organizations and consumer as well as vice versa.

Examples

* company

website A website (also written as a web site) is a collection of web pages and related content that is identified by a common domain name and published on at least one web server. Examples of notable websites are Google, Facebook, Amazon, and W ...

s that serve communication and transaction purposes *

electronic purchasing Electronic may refer to: * Electronics, the science of how to control electric energy in semiconductor * ''Electronics'' (magazine), a defunct American trade journal * Electronic storage, the storage of data using an electronic device * Electronic ...

systems on EDI-basis as well as based on catalogs * systems that support the configuration of products, such as

car configurator A car or automobile is a motor vehicle with Wheel, wheels. Most definitions of ''cars'' say that they run primarily on roads, Car seat, seat one to eight people, have four wheels, and mainly transport private transport#Personal transport, pe ...

s * automated download of product information based on the scan of an article number * activation of an emergency chain based on the monitoring of heart frequency *

s that link consumers, such as recommendation communities

Impacts on business efficiencies

Electronic markets are attributed important impacts on business efficiencies. From an industry perspective,

transaction cost In economics and related disciplines, a transaction cost is a cost in making any economic trade when participating in a market. Oliver E. Williamson defines transaction costs as the costs of running an economic system of companies, and unlike pro ...

economics were used to illustrate the relationship between electronic markets and electronic hierarchies. While the former are in line with the narrow electronic markets definition, the latter are also included in the broader definition. This may be explained since in reality electronic markets have emerged as platforms which combine several modes of governance or types of coordination mechanisms. These “all-in-one-markets” link the possibility of

competitive bidding Procurement is the method of discovering and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. When a government agency buys goods or servi ...

for price discovery with the advantages of a predictable relationship to encourage relationship specific investments (non-contractible issues) and functionalities for closer collaboration. This perspective shows that it is important to distinguish between the market platform itself which creates an infrastructure between multiple parties and the coordination mechanisms operated on this platform which might be market-like or hierarchical in nature.

References

{{reflist
Alt, R. and S. Klein (2011). "Twenty Years of Electronic Markets Research – Looking Backwards towards the Future." Electronic Markets 21(1): 41-51.
* Kaplan, S. and M. Sawhney (2000). "E-Hubs: The New B2B Marketplaces." Harvard Business Review 78(3): 97-103. * Malone, T. W., J. Yates, et al. (1987). "Electronic Markets and Electronic Hierarchies." Communications of the ACM 30(6): 484-497.
Österle, H. and B. Schmid (2008). "Quo Vadis Electronic Markets?" Electronic Markets 18(3): 206-210.
* Standing, S., C. Standing, et al. (2010). "A Review of Research on E-Marketplaces 1997-2008." Decision Support Systems 49(1): 41-51. Information systems