Electronic B2B Marketplaces with Different Ownership Structures

Byungjoon Yoo (), Vidyanand Choudhary () and Tridas Mukhopadhyay ()
Additional contact information
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

Management Science, 2007, vol. 53, issue 6, 952-961

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 (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.1060.0685 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:53:y:2007:i:6:p:952-961

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().