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Horizontal versus Vertical Electronic Business-to-Business Marketplaces

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  • Henseler, Marco

Abstract

This paper analyzes the behavior of horizontal B2B marketplaces along the supply chain in case a vertical intermediary tries to enter by attracting industry-specific buy-side and sell-side firms. It will be shown that an entrant can only integrate all firms along the vertical production chain in case the industry is strong buy-side dominated. For the remaining scenarios we will determine different levels of integration for buy-side and sell-side dominated branches, in which firms from upper stages will stay at the incumbent. Moreover, we will show that horizontal marketplaces for MRO and other simple goods will be driven out of the market in any case.

Suggested Citation

  • Henseler, Marco, 2006. "Horizontal versus Vertical Electronic Business-to-Business Marketplaces," MPRA Paper 40853, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:40853
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    References listed on IDEAS

    as
    1. Caillaud, Bernard & Jullien, Bruno, 2003. "Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-328, Summer.
    2. Sülzle, Kai, 2009. "Duopolistic competition between independent and collaborative business-to-business marketplaces," International Journal of Industrial Organization, Elsevier, vol. 27(5), pages 615-624, September.
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    6. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, June.
    7. BELLEFLAMME, Paul & TOULEMONDE, Eric, 2004. "B2B marketplaces : Emergence and entry," LIDAM Discussion Papers CORE 2004078, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    8. GABSZEWICZ, Jean & WAUTHY, Xavier, 2004. "Two-sided markets and price competition with multi-homing," LIDAM Discussion Papers CORE 2004030, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    9. Mark Armstrong, 2006. "Competition in two‐sided markets," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 668-691, September.
    10. Bruno Jullien, 2005. "Two-sided Markets and Electronic Intermediaries," CESifo Economic Studies, CESifo Group, vol. 51(2-3), pages 233-260.
    11. Roson Roberto, 2005. "Two-Sided Markets: A Tentative Survey," Review of Network Economics, De Gruyter, vol. 4(2), pages 1-19, June.
    12. Chrysovalantou Milliou & Emmanuel Petrakis, 2004. "Business-to-business electronic marketplaces: Joining a public or creating a private," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 9(2), pages 99-112.
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    More about this item

    Keywords

    intermediation; matching; two-sided markets;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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