The chapter discusses the impact of information technology on the shift from hierarchies to markets in coordinating economic activities. Information technology has significantly reduced the time and cost of processing and communicating information, leading to changes in how tasks are accomplished within firms. The authors argue that this technology will lead to a more proportional use of markets rather than hierarchies in coordinating economic activity. The paper introduces an analytic framework to explain the historical and contemporary changes in market structures, focusing on the factors that favor markets or hierarchies. These factors include production and coordination costs, asset specificity, and complexity of product descriptions. The authors predict that the widespread use of information technology will decrease coordination costs, making markets more attractive in certain situations where hierarchies were previously favored. The chapter also explores the emergence of electronic markets and hierarchies, highlighting the benefits of electronic communication, brokerage, and integration effects. Examples from industries such as airline reservations and product distribution illustrate how these technologies have already led to shifts towards electronic markets. The authors predict that unbiased electronic markets will become more common, driven by the benefits of electronic brokerage, and that personalized decision aids may further enhance market efficiency. Finally, the chapter discusses the conditions under which electronic hierarchies will still be desirable, particularly in cases of high asset specificity and complex product descriptions. Electronic integration can improve product development and distribution processes, leading to more efficient and effective cycles.The chapter discusses the impact of information technology on the shift from hierarchies to markets in coordinating economic activities. Information technology has significantly reduced the time and cost of processing and communicating information, leading to changes in how tasks are accomplished within firms. The authors argue that this technology will lead to a more proportional use of markets rather than hierarchies in coordinating economic activity. The paper introduces an analytic framework to explain the historical and contemporary changes in market structures, focusing on the factors that favor markets or hierarchies. These factors include production and coordination costs, asset specificity, and complexity of product descriptions. The authors predict that the widespread use of information technology will decrease coordination costs, making markets more attractive in certain situations where hierarchies were previously favored. The chapter also explores the emergence of electronic markets and hierarchies, highlighting the benefits of electronic communication, brokerage, and integration effects. Examples from industries such as airline reservations and product distribution illustrate how these technologies have already led to shifts towards electronic markets. The authors predict that unbiased electronic markets will become more common, driven by the benefits of electronic brokerage, and that personalized decision aids may further enhance market efficiency. Finally, the chapter discusses the conditions under which electronic hierarchies will still be desirable, particularly in cases of high asset specificity and complex product descriptions. Electronic integration can improve product development and distribution processes, leading to more efficient and effective cycles.