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The Effects of Information Transparency on Suppliers, Manufacturers, and Consumers in Online Markets

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Executive Summary

This paper looks into the effects of information transparency on market participants in an online trading environment. The authors study these effects in business-to-business electronic markets with firms competing in both upstream and downstream industries. The prior literature generally assumes that either the downstream firm (buyer) or the upstream firm (seller) is a monopoly. It is not clear whether information transparency would still create value if both buyers and sellers face oligopolistic competition, where the benefits of information transparency could be competed away. To answer this question, they first develop a simple two-echelon e-market model and then extend the model to more general settings.

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