Iowa electronic markets

In 1998, University of Iowa faculty members created their own futures markets. These experimental markets, designed to provide insights into the behavior of traders and naturally occurring markets, are still going strong. Their clever design gives them another practical use: They can be used to predict future events such as election outcomes and Federal Open Market Committee voting.Futures ; Electronic commerce ; Monetary policy

Economic Effects of Electronic Markets

transport industry;electronic markets;flower industry

Music in electronic markets: an empirical study

Music plays an important, and sometimes overlooked part in the transformation of communication and distribution channels. With a global market volume exceeding US$40 billion, music is not only one of the primary entertainment goods in its own right. Since music is easily personalized and transmitted, it also permeates many other services across cultural borders, anticipating social and economic trends. This article presents one of the first detailed empirical studies on the impact of internet technologies on a specific industry. Drawing on more than 100 interviews conducted between 1996 and 2000 with multinational and independent music companies in 10 markets, strategies of the major players, current business models, future scenarios and regulatory responses to the online distribution of music files are identified and evaluated. The data suggest that changes in the music industry will indeed be far-reaching, but disintermediation is not the likely outcome

Electronic Markets, Search Costs and Firm Boundaries

We study how firm boundaries are affected by the reduction in search costs when business-to-business electronic markets are adopted. Our paper analyzes a multi-tier industry in which upstream parts suppliers incur procurement search costs, and downstream manufacturers incur incentive contracting costs with these parts suppliers. We develop a model that integrates search theory into the hidden-action principal-agent model and characterize the optimal contract, showing that the delegation of search results in an outcome analogous to an effective increase in the search cost of the intermediary, reflected in the magnitude of the cutoff price in the second-best stopping rule. This contract is used to specify the manufacturer's make versus buy decision, and to analyze how the technological changes associated with electronic markets affect vertical organizational scope. Our main results show that when search is information-intensive, electronic markets will result in constant decreases in search costs that reduce the vertical scope of organizations. In contrast, when search is communication-intensive, electronic markets will result in proportionate reductions in search costs that lead to an increase in vertical integration; the latter outcome also occurs if search costs converge. We also discuss the implications of our results for the general problem of designing contracts that optimally delegate costly search to an intermediaryfirm boundaries, vertical integration, search, moral hazard, incentives, principal-agent, electronic markets, B2B markets.

Transaction Streams: Definition and Implications for Trust in Internet-Based Electronic Commerce.

In this paper we analyze how transactions related to the exchange of goods and services are being performed on the Internet. The adoption of electronic markets in an industry has a disintermediation potential because it can create a direct link between the producer and the consumer (without the need for the intermediation role of distributors). Electronic markets lower the search cost, allowing customers to choose among more providers (which ultimately reduces both the costs for the customer and the profits for the producer). In this paper we contend that electronic markets on the Internet have the opposite effect, resulting in our increase in the number of intermediators. We introduce transaction streams, which model how transactions are being conducted and help explain the types of new intermediators that are appearing on the Internet. We also describe mechanisms by which companies are exploring ways of extending transaction streams. To illustrate the model and validate our findings, we analyze transaction streams in the insurance industry and review associated concepts such as trust and brands.transactions; electronic markets;

Price dynamics and shake-outs in electronic markets

This paper presents a model that explains the recent evolution of e-commerce, where over time, prices can increase if no exit occurs, or decrease, if exit occurs. In the model there is uncertainty about the firms' costs, because the technology is new, and consumers face a switching cost, because it is easier to observe the current price of a previous supplier, than the price of other firms

The Impact of Electronic Markets on B2B-Relationships

Although most of the predicted consequences of the internet-revolution in the 90s did not become reality, the internet has lead to sustainable hanges in the organization of most industries. In particular, this is true for business-to-business (B2B) relations between firm. An obvious `proof' for this is the rising number of so-called electronic markets--- especially for B2B transactions---since several years. This paper should help to give a better understanding of the organizational impacts of electronic markets in the context of B2B relations. Therefore we use the incomplete contract framework to build a simple model of a repeated game. It will be shown that the existence of an (alternative) electronic market could influence the willingness to cooperate between the up- and the downstream firm in a B2B-relationship. In our special case, the willingness to cooperate by the buyer will decline.Electronic Markets; Business-to-Business; Industry Structure;

Price dynamics and shake-outs in electronic markets.

This paper presents a model that explains the recent evolution of e-commerce, where over time, prices can increase if no exit occurs, or decrease, if exit occurs. In the model there is uncertainty about the firms' costs, because the technology is new, and consumers face a switching cost, because it is easier to observe the current price of a previous supplier, than the price of other firms.