Abstract
In this paper, we attempt to identify two other important factors that may help to explain the reality of current Business-to-Business (B2B) Internet-based electronic markets (e-markets): the kind of transaction fees that e-market owners charge participants, and the kind of supply chain coordination mechanisms that B2B e-markets facilitate. In a previous model, the policy to coordinate was full return policy. That is, if retailer's order quantity is leftover, the leftover is bought back by supplier. However, in real situations, we consider that all the leftovers aren't bought back by the supplier, with a portion of the leftovers being bought back. We call this system a partial return policy. First, the expected profits of firms participating in e-markets with that of firms participating in traditional markets are compared. Second, the conditions under which both suppliers and retailers would prefer participating in e-markets instead of traditional markets are identified. Lastly, the role of supply chain coordination contracts in offering strong incentives to both retailer and supplier to participate in e-markets is investigated.
