Agent-intermediated electronic markets in international freight transportation

Authors:
Barrie R. Nault;Albert S. Dexter
Affiliations:
Haskayne School of Business, University of Calgary, Calgary, Alberta, Canada;Sauder School of Business, University of British Columbia
Venue:
Decision Support Systems - Special issue: Economics and information systems
Year:
2006

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Abstract

In many industries, agent-intermediated markets are inefficient because information about latent demand and supply never gets to market. We demonstrate how information technology (IT) in the form of an agent-intermediated electronic market (EM) alleviates this problem by enhancing the agent-as-market-maker using the international freight transportation industry as an example. We find that an EM increases agent participation and investment thereby increasing demand and supply. Because of tradeoffs between incentives for investment, the EM chooses a profit allocation between agents resulting in limited agent participation. In addition, when price depends on demand and supply balances, price and volume in the market can increase simultaneously.