Abstract

The Electronic Market Hypothesis (EMH) (Malone, Yates & Benjamin 1987) holds that electronic markets will eventually evolve towards unbiased markets under the pressure of both competitive and legal forces and that this process is inevitable in case of markets for commodities. Based on an initial literature review, we criticise the EMH for its definitional impreciseness, its disregard for strategic and technological counter forces and the absence of market characteristics as contingent factors in the prediction. These critiques drive our research interest in the nature and effectiveness of the competitive and legal forces that are held to be crucial in the evolution towards unbiased markets, in particular in the light of the regulatory authorities that are often installed to institutionalize these forces. In this paper we present our ongoing research that intends to nuance the, in our opinion, overly optimistic and naïve view of the EMH by examining the Dutch electricity industry as an example of a commodity market that has recently been liberalised. Specifically, we examine the nature and effectiveness of the regulatory transparency increasing measures of the DTe (Office of Energy Regulation) from the perspective of the DTe and the comparison websites that these measures are aimed at. Preliminary results indicate that even in markets for commodities, competitive measures have to be complemented with a proactive ‘information authority’ to enforce the ‘inevitable’ evolution towards unbiased, transparent electronic markets.

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