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Twenty years of electronic markets research—looking backwards towards the future

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Abstract

Over the past 20 years the field of electronic markets has seen a considerable proliferation and differentiation. This position paper takes the opportunity of the 21st volume of “Electronic Markets” to look back at important developments and insights, suggesting a framework that captures the multiple facets and indeed empirical breadth and depths of this concept. It comprises three perspectives which include the market environment, governance choices by economic actors as well as the entrepreneurial dynamics of firms who initiate and operate market platforms as their business. In addition, we propose to study the interplay of technological, market, and institutional drivers in order to understand the phenomenon of electronic markets, which is also a precondition for designing electronic markets. Both activities involve more than an economically motivated choice between the discrete alternatives of markets and hierarchies. Rather, electronic markets are configurations across multiple, interdependent dimensions: Technology is an important force in shaping the field, but needs to be complemented by considerations of the competitive environment and the setting of rules in order to ensure efficient and effective plays of the game. Based on this framework, this position paper develops six propositions for the future of electronic markets. Overall, the advantages of intermediated structures, an ongoing technological sophistication, as well as further innovation in market mechanisms and services make electronic markets an enabler for many inter-organizational value chains. While we are confident that the ingenuity of inventors will yield a flow of innovations, recent economic crises have shed a dark shadow over the sustainability of electronic markets. They call for suitable rules and regulation amenable to economic prosperity and stability to be agreed upon on a broad level.

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Notes

  1. The bid-ask spread reflects the value added by intermediaries and consists of the costs of processing orders, holding inventory and adverse selection (Huang and Stoll 1997, 995f).

  2. Coordination is the management of dependencies between activities (Malone and Crowston 1994, 90).

  3. Supported by smart metering technology utility companies might even control some equipment of companies or even households in order to generate demand for electricity in times of spare capacity (e.g. to run the compressor of a refrigerator) or lower demand by taking certain pieces of equipment off line.

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Authors and Affiliations

  1. University of Leipzig, Leipzig, Germany

    Rainer Alt

  2. University of Münster, Münster, Germany

    Stefan Klein

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  1. Rainer Alt
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  2. Stefan Klein
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Correspondence to Rainer Alt.

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Responsible editor: Doug Vogel

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Alt, R., Klein, S. Twenty years of electronic markets research—looking backwards towards the future. Electron Markets 21, 41–51 (2011). https://doi.org/10.1007/s12525-011-0057-z

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