The Organization of Electronic Markets: Contributions from the New Institutional Economics

Abstract

Electronic markets are increasingly gaining scientific and economic attention. In order to realize their often postulated rationalization potential, a closer look into their organization is necessary. New institutional economics provides a body of theory well suited for this task. Transaction cost theory helps to understand why transactions are more often conducted via markets and why those markets require organization. Principal-agent theory explains future (dis-)intermediation structures in electronic markets. Finally, property rights theory helps to understand why a certain level of market intransparency will remain in electronic markets.