|[Traditional market theory defines a market as a place of exchange, where aggregate-demand meets] aggregate supply, by allocating resources, skills and products. Coordination is the key factor for optimizing allocation and to yield maximum economic welfare.
Schmidt [sic] (1993) defines 3 phases that are substantial for any process of market coordination, thus also for electronic markets: (1) Information Phase: information on available products and services, their specifications, and delivery terms. (2) Agreement Phase: after evaluating all information, contacting potential transaction partners and negotiation of terms and conditions, as well as establishment of a legal basis. (3) Settlement Phase: physical exchange of goods and/or services and flow of financial transactions and information.
Schmidt [sic], B. 1993, "Electronic Markets," Electronic Markets, No.9-10, pp. 3-4 (October 1993).
According to traditional market theory, markets are defined as economic places of exchange, where aggregate demand meets aggregate supply. They serve to allocate resources, skills and products. Coordination is the key factor to optimize allocation and to yield maximum economic welfare. [...] Traditional market theory, however, does not reflect the real world: [...]
Three phases, which are substantial for any process of coordination, can be distinguished: Phase 1: Information gathering. On the input side, information on available products and/or services, their specifications, suppliers and delivery terms are required.
As soon as all information has been evaluated, we can proceed to contact potential transaction partners. Terms and conditions have to be fixed (terms of payment and delivery, warranties, additional service etc.).
Phase 3: Settlement. [...] The physical exchange of goods is accompanied by flows of financial transactions and information.