Content area
Full text
Information Technology and Management 6, 163179, 2005
2005 Springer Science + Business Media, Inc. Manufactured in The Netherlands.LEVENT V. ORMAN [email protected]
Cornell University, Johnson Graduate School of Management, Ithaca NY 14853Abstract. Electronic communities can be designed to organize consumers, to pool their purchasing power,
and to guide their purchasing decisions. Such commercial electronic communities have the potential to facilitate the creation of novel marketplaces, and even radically change the buyerseller interaction, as physical
communities did throughout the history. Commercial electronic communities are groups of consumers that
participate in the marketplace as a single unit. In addition to bargaining power gained from such bundling,
such communities can expand markets by reducing market uncertainty, and they have the potential to drastically reduce transaction costs. However, these benefits are not automatic, and the optimum design and
implementation of communities are critical to their economic success. The size and the makeup of a community, the size and the nature of the product bundle it offers, and the concise description and efficient
implementation of the community as an electronic marketplace are all critical factors for the success of a
community.Keywords: electronic communities, electronic markets, market design, market implementation, distributed
markets1. Electronic communitiesElectronic communities are virtual gathering places for people sharing common interests.
Bulletin boards and newsgroups were the earliest examples of virtual gathering places.
Large numbers of bulletin boards and newsgroups have been created, each characterized
by a theme, and each attracting users interested in that theme, and facilitating interaction
and information exchange among them. Electronic communities are the current multimedia versions of these early attempts, where not only text messages are exchanged, but
photographs, audio and video files, interactive chat, conferencing, and database access
are available to community members [12]. Although communities have been studied
extensively as a social phenomenon, their commercial applications have been limited
[5,12,15]. Early Internet vendors have established communities to facilitate interaction
among their customers, in an effort to engender loyalty and a sense of community among
their customers, and to engage customers to extend the length of stay at their site [2,10].
Such vendor created communities are useful, but very limited in scope and functionality
as commercial enterprises. They are limited in scope to one vendors products, and they
are limited in functionality to...