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Business‐to‐business electronic marketplaces: Joining a public or creating a private
Author(s) -
Milliou Chrysovalantou,
Petrakis Emmanuel
Publication year - 2004
Publication title -
international journal of finance and economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 39
eISSN - 1099-1158
pISSN - 1076-9307
DOI - 10.1002/ijfe.234
Subject(s) - incentive , social planner , competitor analysis , spillover effect , business , industrial organization , quality (philosophy) , microeconomics , profit (economics) , marketing , economics , philosophy , epistemology
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.