Article ID: | iaor2007538 |
Country: | Netherlands |
Volume: | 41 |
Issue: | 4 |
Start Page Number: | 787 |
End Page Number: | 802 |
Publication Date: | May 2006 |
Journal: | Decision Support Systems |
Authors: | Nault Barrie R., Dexter Albert S. |
Keywords: | transportation: general, marketing, e-commerce |
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.