Electronic Commerce and Market Mechanisms: A Game-Theoretic Approach

This paper takes the view that providers of electronic markets are to be considered as economic actors in a strategic game played with potential buyers and sellers. The crucial assumption clearly concerns the choice of instruments that a market provider is considered to have at hand. Contrary to large parts of mainstream economic theory, which assume a simple perfect auction market setting guaranteeing price flexibility and actual trade taking place only in situations where supply equals demand, the position taken here emphasizes that market mechanisms can be very diverse and trade outside of equilibrium is essential. To operationalize these core assumptions the instrument of the market provider is modeled as the choice of market mechanisms that is provided.