The role of electronic marketplaces is to act as an intermediary between supply and demand (Schmid 1993). Using a simplified classification, it is possible to distinguish between two general types of marketplaces on the World Wide Web...

We provide a theoretical justification for bi-sourcing, which refers to thesituation where a final goods producer buys an input from an outside supplier and alsoproduces it in-house. Bi-sourcing occurs if the marginal cost of producing the input inhouseis higher than the marginal cost of outside...