The sustainability of B2B e-marketplaces: Ownership structure, market competition, and prior buyer-seller connections

Authors:
Kexin Zhao;Mu Xia;Michael J. Shaw;Chandrasekar Subramaniam
Affiliations:
Department of Business Information Systems and Operations Management, Belk College of Business, University of North Carolina at Charlotte, 9201 University City Boulevard, Charlotte, NC 28223, USA;Department of Business Administration, College of Business, University of Illinois at Urbana-Champaign, 350 Wohlers Hall, MC-706, Champaign, IL 61820, USA;Department of Business Administration, College of Business, University of Illinois at Urbana-Champaign, 350 Wohlers Hall, MC-706, Champaign, IL 61820, USA;Department of Business Information Systems and Operations Management, Belk College of Business, University of North Carolina at Charlotte, 9201 University City Boulevard, Charlotte, NC 28223, USA
Venue:
Decision Support Systems
Year:
2009

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Abstract

B2B e-marketplaces alter the structure of buyer-seller trading networks. To study the network-level structural changes caused by the emergence of e-marketplaces, we develop a multiple-player noncooperative game, where rational firms select optimal interfirm connections and the network is endogenously formed and evolved. We examine the conditions under which both neutral and biased B2B e-markets will sustain, when previous buyer-seller connections exist. We test our model in both the oligopoly market and the oligopsony market. Our analysis explains how ownership structures and market competition interact with each other to affect e-market sustainability. We also identify other critical factors for sustainable e-markets and their social welfare implications.