A minimal market model in ephemeral markets

Abstract

Peer-to-peer markets going mobile spur spontaneity in trading considerably. Spontaneity, however, imposes severe informational requirements on the market participants. Informational requirements are twofold: Firstly, participants have to agree on a common vocabulary for that spontaneous market. Secondly, they need precise information about how the trading process is organized. Due to the lack of a central market operator these common understandings must be determined by the market participants themselves. Prior to any market process, these terms and regulations must be distributed by the market participant that initiates the market process. This raises the question concerning the used ontology. Standards describing (business) processes are available in general, but are currently not suitable for ephemeral markets. Electronic markets are extremely context sensitive, making the establishment of common understandings crucial as well as difficult. This paper uses structural similarities of markets and creates a Minimal Market Model. Since this model is for all conceivable markets constituent, it can be used as the core component. As any market is founded on this minimal model, it can be systematically extended to capture the peculiarities of each particular market. The derivation of the Minimal Market Model is founded on a solid ground of economic theory and refined such that it can be expressed in a formal way. © Springer-Verlag 2004.