Designing markets for open source production of digital culture goods
Proceedings of the ninth international conference on Electronic commerce
Designing markets for co-production of digital culture goods
Decision Support Systems
Online consumer market inefficiencies and intermediation
ACM SIGMIS Database
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The electronic markets hypothesis (EMH) in the information systems (IS) literature suggests that information technology (IT) will reduce coordination costs across firms, leading to market-based forms of economic activity. With the advent of the Internet, we have seen a move to unbiased electronic markets. However, in some industries electronic hierarchies or biased markets predominate, contrary to the predictions of the impacts of IT suggested by the EMH. We present a hybrid theory to explain how moves to unbiased markets are facilitated and accelerated by IT. This is based on electronic markets and hierarchies theory, and the theory of market design. We explore how different forces and situational factors can inhibit the move to advanced forms of market-based organization. Together, these theories offer valuable insights to understand which forces will predominate with respect to whether a vertical market will be transformed to a biased electronic market or an unbiased electronic market. We analyze mini-cases in the context of three business-to-business e-commerce settings: fixed income securities, the electric power industry, and corporate travel services. The industries we have selected exhibit different outcomes which illustrate the value of the new theory relative to predictions involving market structure transformations.