Academic Activities
[Research]Electronic B2B Marketplaces with Different Ownership Structures
2007.06.01 Views 921 경영학연구분석센터
Management Science
Volume 53, Issue 6, June 1, 2007, Page Range: 952 - 961
Byungjoon Yoo Korea University Business School, 1, 5-ga, Anam-Dong, Sungbuk-Gu, Seoul 136-701, Korea
Vidyanand Choudhary Merage School of Business, University of California, Irvine, Irvine, California 92697
Tridas Mukhopadhyay Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213
DOI: http://dx.doi.org/10.1287/mnsc.1060.0685
Abstract
This paper analyzes electronic marketplaces with different ownership structures: biased marketplaces and neutral marketplaces. Biased marketplaces can be either buyer-owned or supplier-owned, whereas neutral marketplaces are owned by independent third parties. We develop a single-period model, with fulfilled expectations equilibrium. The buyers experience positive network effects that are a function of the number of suppliers and the suppliers receive similar positive network effects depending on the number of buyers. We develop a general model with atomistic buyers and suppliers. We find that biased marketplaces set prices to induce greater participation (demand) from both buyers and suppliers compared to a neutral marketplace. This counterintuitive result can be understood in the context of the positive cross-network effects experienced by buyers and suppliers and the added benefit to the owner of a biased marketplace from participating in the marketplace. Biased marketplaces also provide greater social welfare compared to neutral marketplaces.
Keywords:
business-to-business ;
ownership ;
network effect ;
intermediary ;
marketplace
Volume 53, Issue 6, June 1, 2007, Page Range: 952 - 961
Byungjoon Yoo Korea University Business School, 1, 5-ga, Anam-Dong, Sungbuk-Gu, Seoul 136-701, Korea
Vidyanand Choudhary Merage School of Business, University of California, Irvine, Irvine, California 92697
Tridas Mukhopadhyay Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213
DOI: http://dx.doi.org/10.1287/mnsc.1060.0685
Abstract
This paper analyzes electronic marketplaces with different ownership structures: biased marketplaces and neutral marketplaces. Biased marketplaces can be either buyer-owned or supplier-owned, whereas neutral marketplaces are owned by independent third parties. We develop a single-period model, with fulfilled expectations equilibrium. The buyers experience positive network effects that are a function of the number of suppliers and the suppliers receive similar positive network effects depending on the number of buyers. We develop a general model with atomistic buyers and suppliers. We find that biased marketplaces set prices to induce greater participation (demand) from both buyers and suppliers compared to a neutral marketplace. This counterintuitive result can be understood in the context of the positive cross-network effects experienced by buyers and suppliers and the added benefit to the owner of a biased marketplace from participating in the marketplace. Biased marketplaces also provide greater social welfare compared to neutral marketplaces.
Keywords:
business-to-business ;
ownership ;
network effect ;
intermediary ;
marketplace