Essay about The Emerging Role of Electronic Markets
E c o n o m i c s
Internet-based electronic marketplaces leverage information technology to match buyers and sellers with increased effectiveness and lower transaction costs, leading to more efficient, “friction-free” markets.
The Emerging Role of
Electronic Marketplaces on the Internet
Markets play a central role in the economy, facilitating the
exchange of information, goods, services, and payments. In the process, they create economic value for buyers, sellers, market
intermediaries, and for society at large. Recent years have seen a dramatic increase in the role of information technology in markets, both in traditional markets, and in the emergence of electronic marketplaces, such as …show more content…
August 1998/Vol. 41, No. 8 COMMUNICATIONS OF THE ACM
For instance, some financial markets use one or more of the several types of auctions to determine prices, such as the “call market” auction at the opening of a trading day at the New York Stock Exchange, when bids are accepted up to a certain time and exchange occurs when the market opens. This is the first price that is communicated via the stock market ticker to the market at large, kicking off a day of “continuous market” trading. Other markets, such as the traditional automobile dealership, employ negotiation between buyers and sellers until a price is reached. In still other markets, such as the typical department store, merchants make firm offers that customers can either take or leave. Facilitation of Transactions. The matching function of a market establishes a bilateral relationship between a buyer and a seller.