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Journal of Computer-Mediated Communication
Volume 5, Issue 3 

Computer-Mediated Markets: New Participants and Structures

In This Issue:

Computer Mediated Markets: An Introduction and a Preliminary Test of Market Structure Impacts

Electronic Commerce and the Implications for Market Structure: The Example of the Art and Antiques Trade

The Evolution of the Digital Divide: How Gaps in Internet Access May Impact Electronic Commerce

Cybermediation in Auto Distribution: Channel Dynamics and Conflicts

The Role of Intermediaries in the Development of Trust on the WWW: The Use and Prominence of Trusted Third Parties and Privacy Statements

Emerging Patterns from the Dynamic Capabilities of Internet Intermediaries

Interoperability and Electronic Commerce: A New Policy Framework for Evaluating Strategic Options

The Effects of Electronic Commerce on the Structure of Intermediation

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Computer Mediated Markets: An Introduction and a Preliminary Test of Market Structure Impacts CharlesSteinfield  Visiting Professor, Faculty of Technology, Policy and Management,Delft University of Technology Department of Telecommunication, Michigan State University  Alice Chan Department of Communication, Cornell University Robert E. Kraut Social and Decision Sciences Department and Human-Computer Interaction Institute, Carnegie Mellon University Electronic commerce may influence the way in which goods are traded between businesses. Many believe that Internet-based business-to-business e-commerce will reduce the extent to which firms buying goods and services are "locked in" to a single supplier. Using a secondary analysis of data collected in late 1996 on firms' use of electronic networks for transactions, we empirically test the effects of Internet use on buyer lock-in. Results are weak, but suggest that using the Internet rather than proprietary computer networks in connecting with external trading partners appears to lessen a buying firm's dependence on its primary supplier. The Internet seems to be especially valuable in allowing small firms to connect to external constituents Electronic Commerce and the Implications for Market Structure:The Example of the Art and Antiques Trade Thomas Adelaar Telematica Instituut Enschede, The Netherlands  In the recent past Internet gurus, such as Bill Gates, expected electronic commerce to be the dawn of a friction-free market. Structural changes in markets, such as disintermediation, would occur due to the impact of electronic trade and electronic information exchange. As argued by Sarkar, Butler and Steinfield (1995), these statements are oversimplified and exaggerated, because different outcomes are possible, such as cybermediation and re-intermediation. In order to clarify the questions concerning the implications of e-commerce for market structure, this paper attempts to validate the model developed by Sarkar et al., by applying the model to the art and antiques market. The implications of e-commerce depend on the choice to internalize electronic inter-organizational activities or outsource these activities to so-called cybermediaries. The emergence of new intermediary roles and actors is not always based on pure economic argument. Of equal importance are the constraints imposed by the social and cultural embedding of intermediary roles. However, the precise impact on market structure cannot be explained exclusively by e-commerce. In this paper, it is argued that a better understanding of the evolutionary impact of e-commerce on existing market structures and intermediary roles is reached by incorporating the historical and regional perspectives.    The Evolution of the Digital Divide: How Gaps in Internet Access May Impact Electronic Commerce Donna L. Hoffman Thomas P. Novak Ann E. Schlosser  eLab, Owen Graduate School of Management Vanderbilt University Enthusiasm for the anticipated social dividends of the Internet appears boundless. Indeed, the Internet is expected to do no less than virtually transform society. Yet even as the Internet races ambitiously toward critical mass, some social scientists are beginning to examine carefully the policy implications of current demographic patterns of Internet access and usage. Key demographic variables like income and education drive the policy questions surrounding the Internet because they are the most likely to differentially impact the consequences of interactive electronic media for different segments in our society. Given these concerns, we set out to systematically investigate the differences between whites and African Americans in the United States with respect to computer access, which is the current prerequisite for Internet access, and Web use. We wished to examine whether observed race differences in access and use can be accounted for by differences in income and education, how access impacts use, and when race matters in the calculus of equal access. The particular emphasis of this research is on how such differences may be changing over time. We believe our results may be used as a window through which policymakers might view the job of ensuring access to the Internet for the next generation.    Cybermediation in Auto Distribution: Channel Dynamics and Conflicts Stefan Klein University of Muenster, Germany  Dorian Selz University of St.Gallen, Switzerland The emerging electronic market space will change the structure of value chains and will,in particular, increase the presence of intermediaries (so-called cybermediaries). The paper examines the roles and functions of these new players and their impact on established distribution and sales channels in the case of the automotive industry. Two different automotive cybermediary categories are identified: automotive service brokers and automotive information brokers. Their initial success indicates that they might become serious competitors to the auto manufacturer's exclusive distribution systems. Our analysis focuses on the impact of the Web in an industry that is characterized by physical products and infrastructures. Based on this analysis and reconstruction of current trends in the auto industry, we will discuss strategic options for auto manufacturers using a blend of market brand strength mixed with the concept of an on-line community.   The Role of Intermediaries in the Development of Trust on the WWW: The Use and Prominence of Trusted Third Parties and Privacy Statements Jonathan W. Palmer Joseph P. Bailey Samer Faraj Robert H. Smith School of Business  University of Maryland Developing trust between suppliers and consumers is critical for the continued growth of Internet commerce. This article presents an empirical investigation into how firms promote trust by exploring the use and prominence of Trusted Third Parties (TTPs) and privacy statements. The Web sites of 102 publicly held firms with predominantly Internet based businesses were examined for their use of TTPs and privacy statements, the number of links, currency of the Web site, length of time the Web site had been operating, traffic, and financial performance. Surprisingly, only 17 of the firms utilized trusted third parties and only 45 had privacy statements. The article presents a methodology for the analysis of four propositions that explore the relationship of embeddedness and a firm's length of time online to the use and prominence of TTPs and privacy statements. The exploratory data in this article clearly supports the proposition that the use of TTPs and privacy statements increase with the embeddedness of the Web site. This article then discusses the potential reasons for this finding including how TTPs strategically solicit firms and why trusted firms may be more likely to be embedded. The remaining three propositions show mixed results but provide insight into the strategic use of TTPs and privacy statements. One key insight is that TTPs and privacy statements are actually used quite differently by firms to promote trust in Internet commerce.    Emerging Patterns from the Dynamic Capabilities of Internet Intermediaries Judy Scott Department of Management Science and Information Systems  The University of Texas at Austin The Internet has had a major impact on threats and opportunities available to intermediaries in many industries. Prior research using transaction cost theory shows four possible outcomes: Internet supplemented direct market, threatened intermediaries, cybermediaries and Internet supplemented intermediaries. This paper extends the "four outcomes" framework, by integrating it with research on dynamic capabilities. This new framework explains emerging patterns of response from threatened intermediaries in the personal computer industry. The specific scenario chosen by the threatened intermediary depends on its dynamic capability. Future research can use the integrated framework to predict Internet impacts on intermediaries in other industries.    Interoperability and Electronic Commerce: A New Policy Framework for Evaluating Strategic Options Howard Williams University of Strathclyde  Jason Whalley TNO - Institute of Strategy, Technology and Policy Feng Li University of Strathclyde  This paper provides a new policy framework for the development of standards for interoperability in electronic commerce. It stresses the complexity of the notion of interoperability and provides a structure for reviewing interoperability between various players in the markets for electronic commerce. Furthermore, the paper highlights the need to structure the questions surrounding policy intervention in terms of market development. However, a key issue that needs to be resolved is the question of interoperability. Interoperability is defined as the set of protocols that ensure end-to-end provision of a given service in a consistent and predictable way. These protocols not only include a set of technical specifications but also include a set of contractual procedures to ensure fair, transparent and consistent interconnection as well as an institutional framework that ensures fair competition. Thus interoperability can be seen to take a variety of policy formats as the market evolves. This paper develops a new framework which offers the ability to shape policy in such a way as to accommodate the trade-offs between the incentives to innovate and the need to avoid anti-competitive behavior and ensure all firms can trade equally within given markets.    The Effects of Electronic Commerce on the Structure of Intermediation Stefan W Schmitz Vienna University of Economics The paper questions the notion that the diffusion of electronic commerce will lead to disintermediation. Rather than interpreting intermediation as a single service it is pointed out that intermediaries can provide a number of services. The analysis based on the New Institutional Economics, Market Microstructure Theory, and Information Economics shows that the three intermediation services studied are, generally, not under threat by the diffusion of electronic commerce. The overall effects on intermediation depend on the relevance of these services relative to others (e.g. order processing), which are supposed to become obsolete.