The article discusses the emerging role of electronic marketplaces, particularly those based on the Internet, in facilitating economic transactions. These marketplaces leverage information technology to enhance the efficiency of matching buyers and sellers, reduce transaction costs, and create more "friction-free" markets. The functions of markets, including matching buyers and sellers, facilitating information exchange, and providing institutional infrastructure, are discussed, with a focus on how electronic marketplaces enhance these functions. The article highlights the impact of the Internet on product offerings, search costs, price discovery, and facilitation of transactions. It also explores the dynamics of electronic markets, such as the potential for winner-take-all market structures and the role of intermediaries in aggregating services and products. The article concludes by discussing the potential for electronic marketplaces to reduce search costs, increase product differentiation, and transform the role of intermediaries, leading to greater economic efficiency and growth.The article discusses the emerging role of electronic marketplaces, particularly those based on the Internet, in facilitating economic transactions. These marketplaces leverage information technology to enhance the efficiency of matching buyers and sellers, reduce transaction costs, and create more "friction-free" markets. The functions of markets, including matching buyers and sellers, facilitating information exchange, and providing institutional infrastructure, are discussed, with a focus on how electronic marketplaces enhance these functions. The article highlights the impact of the Internet on product offerings, search costs, price discovery, and facilitation of transactions. It also explores the dynamics of electronic markets, such as the potential for winner-take-all market structures and the role of intermediaries in aggregating services and products. The article concludes by discussing the potential for electronic marketplaces to reduce search costs, increase product differentiation, and transform the role of intermediaries, leading to greater economic efficiency and growth.