The article by J. Yannis Bakos explores the role of electronic marketplaces in reducing buyer search costs and improving market efficiency. Electronic marketplaces, which facilitate the exchange of information about prices and product offerings between buyers and sellers, can significantly lower the costs associated with buyer search, thereby enhancing market competition and resource allocation efficiency. The author models the impact of search costs in markets with differentiated products, showing that reducing these costs can improve market efficiency but may reduce seller profits. The article also discusses the investment incentives of buyers, sellers, and independent intermediaries in electronic marketplaces, highlighting that sellers may resist the introduction of such systems if they cannot capture a significant portion of the benefits. Additionally, the paper introduces the concept of separating price and product information search costs, suggesting that this could further enhance the efficiency of electronic marketplaces. Overall, the article provides a comprehensive analysis of how electronic marketplaces can address market failures and improve economic outcomes.The article by J. Yannis Bakos explores the role of electronic marketplaces in reducing buyer search costs and improving market efficiency. Electronic marketplaces, which facilitate the exchange of information about prices and product offerings between buyers and sellers, can significantly lower the costs associated with buyer search, thereby enhancing market competition and resource allocation efficiency. The author models the impact of search costs in markets with differentiated products, showing that reducing these costs can improve market efficiency but may reduce seller profits. The article also discusses the investment incentives of buyers, sellers, and independent intermediaries in electronic marketplaces, highlighting that sellers may resist the introduction of such systems if they cannot capture a significant portion of the benefits. Additionally, the paper introduces the concept of separating price and product information search costs, suggesting that this could further enhance the efficiency of electronic marketplaces. Overall, the article provides a comprehensive analysis of how electronic marketplaces can address market failures and improve economic outcomes.