Describes the business model for online market makers, businesses that use the Internet to organize a market participants to trade in a virtual “place” to its rules governing stock exchanges, and to support the infrastructure for trade. First, a definition of the market-making and presents various ways to categorize online market maker. Next, he describes how to create online market maker for market participants. Then examines the profitability of market making, focusing on the revenue … Read more »

Describes the business model for online market makers, businesses that use the Internet to organize a market participants to trade in a virtual “place” to its rules governing stock exchanges, and to support the infrastructure for trade. First, a definition of the market-making and presents various ways to categorize online market maker. Next, he describes how to create online market maker for market participants. Then examines the profitability of market making, focusing on the revenue and cost drivers, both online and offline examples. Based on this analysis, the last section examines the risks and possible payments to online market makers from pursuing aggressive growth strategies. Examines the value proposition of these companies and the economic constraints they face offered. Finally, a framework for assessing whether the adoption of aggressive growth strategies prudent for online market-maker must be submitted.
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Thomas R. Eisenmann,
Christopher J. Hackett
28 pages.
Publication Date: Dec 21, 2000. Prod #: 801308-PDF-ENG
Online Market Makers HBR case solution

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