Electronic brokerage and electronic auction: The impact of IT on market structures

Great progress has been made over the past few years in the study of the impact of IT on inter-firm trade relationships and markets. Most works in this area focus on firm boundaries (purchasing or outsourcing) or buyer-seller relations in general. Although these works are based on reasonable theoretical grounding and many of them have been tested empirically, they do not provide a complete explanation for why different forms of electronic markets have emerged. This article identifies two types of electronic markets-electronic brokerage and electronic auction-by investigating the impact of IT on transaction costs (search, coordination and trade settlement costs) under four different market structures. The economic forces behind the introduction of electronic marketplaces, which either change or support existing market structures, are analyzed along these two market dimensions. Social and organizational barriers to successful implementation of electronic market systems are also discussed.