Electronic Retail Markets

The economic system has created a number of institutions which should, from the transaction cost point of view, assure the most advantageous distribution of needs. Thus the price can become a means of information, indicating the collective situation of supply and demand, according to microeconomic theory. Today’s market places are much more complex, remotely located and supported by mail and telecommunication. What exactly is the difference between a market, or market mechanism (i.e. an institution which, in an abstract sense, functions as a market place) and an electronic market? It is a very specific use of information technology, which literally annuls space. The merging of computer and telecommunication connects two substantial infrastructures of our information technology. Electronic markets are markets realised with the help of this mature telematic form. They contain supply and demand, in the form of virtual information objects, which are available instantly and equally for all sellers and buyers all over the world. But the construction of virtual market places in global telematics media, according to the pattern of traditional market places or mechanism, does not exploit the potential of electronic markets at all. Furthermore, an electronic market’s capacity to add, upon request, additional services to basic transactions opens up entirely new possibilities. This is especially the case with banking services, as well as with insurance and logistics services. Even entirely new services may arise in the electronic markets (e.g. products which are custom-made for very specific client groups in order to comprehensively solve their problems).