Business-to-business electronic marketplaces: Joining a public or creating a private

Chrysovalantou Milliou and Emmanuel Petrakis

International Journal of Finance & Economics, 2004, vol. 9, issue 2, 99-112

Abstract: We analyse a firm's incentives to create a private B2B e-marketplace or to join a public e-marketplace. In the former the firm incurs higher set-up costs but lower quality investment costs due to closer supplier-buyer collaboration than in the public. In the latter, the firm's quality improvement may spillover to competitors. We show that a firm's incentives to create a private e-marketplace are stronger, the closer is supplier-buyer collaboration, the higher are spillovers, and the larger is the buyer's profit share within the e-marketplace. Our welfare analysis indicates that a firm's incentives do not always coincide with those of a social planner. Copyright © 2004 John Wiley & Sons, Ltd.

Date: 2004
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DOI: 10.1002/ijfe.234

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