Affiliated Organization

University of Amsterdam, Netherlands


The Electronic Market Hypothesis (EMH ) (Malone & Yates & Benjamin 1987) holds that electronicmarkets will eventually evolve towards unbiased markets under the pressure of both competitive andlegal forces and that this process is inevitable in case of markets for commodities. We criticize theEMH for its definitional impreciseness, its disregard for strategic and technological counter forces andthe absence of market characteristics as contingent factors in the prediction. These critiques drive ourresearch interest in the nature and effectiveness of the competitive and legal forces that are held to becrucial in the evolution towards unbiased markets, in particular in the light of the regulatory authoritiesthat are often installed to institutionalize these forces. In this paper we present our ongoing researchthat intends to nuance the, in our opinion, overly optimistic and naive view of the EMH by examiningthe Dutch electricity industry as an example of a commodity market that has recently been liberalized.Specifically, we examine the nature and effectiveness of the regulatory transparency increasingmeasures of the DTe (Office of Energy Regulation) from the perspective of the DTe and thecomparison websites that these measures are aimed at. Preliminary results indicate that even inmarkets for commodities, competitive measures have to be complemented with a proactive‘information authority’ to enforce the ‘inevitable’ evolution towards unbiased, transparent electronicmarkets.