Electronic Markets

Markets are a fundamental feature of modern capitalism and have a long history behind them. During the Middle Ages in England, for example, fairs and markets were organized by individuals under a franchise from the king. Organizers of these markets not only provided the physical facilities for the markets, but were also responsible for security and settlement of disputes in the trading. Throughout history, some traditional markets have diminished in importance while new ones have gained in importance. For example, stock and commodities markets, previously not significant, now play a vital role in the world economy. Regardless of changes, the fundamental functions of markets remain the same: to match buyers and sellers, enforce contracts, and provide a price mechanism to guide the trade.

Electronic markets are markets connected through modern communications networks and powered by high-speed computers. In an electronic marketplace, buyers...