Physical and Electronic Wholesale Markets: An Empirical Analysis of Product Sorting and Market Function

Author List: Overby, Eric; Mitra, Sabyasachi;
Journal of Management Information Systems, 2014, Volume 31, Issue 2, Page 11/1/1946.
Markets can yield significant economic benefits by improving transaction efficiency, but effective design is necessary to achieve these benefits. We compare a physical market to a discrete electronic market in the wholesale used vehicle industry to evaluate how their different designs work for different types of transactions. We find that buyers and sellers balance adverse selection costs and other transaction costs when using the two markets, with the physical market serving as the general exchange and the electronic market serving as a spot market for vehicles with low adverse selection risk. These findings increase our understanding of how sellers and buyers distribute supply and demand between physical and electronic markets in industries in which they coexist. They also increase our understanding of how information technology can improve market function in wholesale environments.
Keywords: competitive effects of IS;electronic auctions;electronic financial markets;electronic market assessment;electronic market design;IT effects on industry structure;longitudinal research;market structure;network economics
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#30 0.227 market trading markets exchange traders trade transaction financial orders securities significant established number exchanges regulatory structures order traditional stock provides
#84 0.213 electronic markets commerce market new efficiency suppliers internet changes marketplace analysis suggests b2b marketplaces industry examine easy product making physical
#202 0.110 online uncertainty reputation sellers buyers seller marketplaces markets marketplace buyer price signaling auctions market premiums ebay transaction reverse literature comments
#151 0.109 costs cost switching reduce transaction increase benefits time economic production transactions savings reduction impact services reduced affect expected optimal associated
#285 0.095 effects effect research data studies empirical information literature different interaction analysis implications findings results important set large provide using paper
#270 0.056 design designs science principles research designers supporting forms provide designing improving address case little space criteria methods increasing synthesis designer