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Logic of Electronic Markets
American Hospital Supply's order-entry system represents a trend toward "electronic markets," networks that allow customers to compare and order from competing suppliers. By cutting transaction costs, electronic markets make it cheaper to buy than to make many products and will lead to more market activity and fewer vertically integrated companies. Customers like the efficiency and convenience of electronic sales channels but want to choose among different vendors. Business can take advantage of the trend by creating electronic markets - alone or as part of an industry group.