Market transparency

Market transparency is in the economics of the extent of the knowledge of market participants on the market data , the market situation and market development on a particular market .

General

Market participants are all economic entities ( companies , government , consumers and foreign countries ) who appear as suppliers or buyers in a relevant market . In order to be able to make buying and selling decisions, you need a large amount of market-relevant information . The higher your level of information , the more market transparency there is:

${\ displaystyle {\ text {Degree of information of the market transparency}} = {\ frac {\ mathrm {actually {\ ddot {a}} actually \ available \ market information}} {\ mathrm {available \ ddot {u}} available \ market information }}}}$

Complete market transparency is therefore 100%, imperfect market transparency between 0 and 100% and complete ignorance at 0%.

The state leaves the creation of market transparency largely to the social, economic and political interest groups , consumer organizations (such as the Stiftung Warentest ) and the individual consumer who can obtain information from the mass media .

history

As early as 1935, Oskar Morgenstern had shown in his essay Perfect Foresight and Economic Equilibrium that with a complete knowledge of all market parameters, including the plans and future actions of all market participants, logically no market can function. Because with perfect foresight, the plans and actions of a market participant would have to be based on the knowledge of the plans and future actions of all others […] Since this condition applies to all market participants, the actions of all must be determined before they can be determined. Just as a perfectly smooth surface no longer allows movement, but must be “imperfectly smooth” and offer resistance to move forward, the imperfect knowledge of market participants is always a prerequisite for the functioning of markets. In practice, market transparency can therefore only ever be a degree of (objective) market clarity or a degree of (subjective) market overview. In the period that followed, economics gave preference to the term “complete market transparency” over “complete market transparency”.

Independent, publicly accessible reports on quality serve to increase market transparency . In the health and care sector, this includes, for example, the quality reports from hospitals or, in the case of energy supply, the market transparency center for wholesale electricity and gas . Institutions that serve this purpose are, for example, the Federal Network Agency .

A high degree of market transparency can lead to disintermediation . H. lead to the elimination of ( trading ) intermediaries . The increased market transparency due to the new information media ( Internet , mobile communications ) is often seen as a reason for the economic decline of many wholesalers and retailers in some market segments ( electronic trade and electronic procurement ).

species

Complete market transparency exists when all economic subjects have all market data, while complete market transparency is not characterized by any information about what is happening in the market. Both borderline cases do not exist in reality. Complete market transparency is one of the premises in the market equilibrium of complete competition . Horizontal market transparency on the part of the provider is the mutual transparency of the offer; A relatively high horizontal market transparency is the prerequisite for the occurrence of an implicit collusion , which has a competitive effect , especially in polypolistic markets. The vertical market transparency to consumers, which is an overview of the different offers and can choose the most advantageous for them. A high level of vertical market transparency also promotes competition; in most cases, the horizontal market transparency will be higher than the vertical one.

Type of market data

The market data relevant for buying and selling decisions are in particular suppliers and buyers, market prices , type and product quality of goods and services, delivery and payment conditions , market volume , guarantee declarations , preferences or market-relevant legal regulations. Because of the information value, market participants will limit their decisions and buying behavior to a few of this market data. The spontaneous purchase is based on no or very little market transparency . The more expensive a product or service is, the more market data is evaluated by the buyer and the longer the planning horizon . Obtaining information for the preparation of a market-relevant decision is therefore only efficient until the marginal costs of the last piece of information correspond to its marginal utility : ${\ displaystyle K_ {g}}$ ${\ displaystyle N_ {g}}$

${\ displaystyle {K_ {g}}}$= .${\ displaystyle {N_ {g}}}$

In this situation, no further market data is obtained, the purchase or sale decision can be made.

consequences

Since information and communication costs are mostly the main components of transaction costs , market transparency can also help reduce transaction costs. An increase in the horizontal market transparency leads to a negative impact on competition in the homogeneous oligopoly ("glass case situation"), because complete market transparency would have a crippling effect, since the competitors would sit in a glass case with regard to their competitive actions. An increase in transparency on the demand side, on the other hand, has a positive effect on competition.

The classic consumer goods markets such as the automobile market or the food market are characterized by a low to medium degree of market transparency, suppliers and buyers are only moderately informed about price, quality and selection. There is a high level of transparency in markets where the number of suppliers and products is manageable, such as on the mineral oil market. In Germany , this principle was applied through the creation of the market transparency office for fuels at the Federal Cartel Office , in particular to compare prices at petrol stations and, if necessary, to identify the existing price strategies of the mineral oil companies.

Recently there has been a trend towards dynamically changing prices, practically exclusively in the Internet trade. The reason for this is the attempt to reduce market transparency and thus to increase marginal costs (see above) in order to be able to enforce higher prices.

Individual evidence

1. Patrick Schwan, The informed consumer? , 2009, p. 85
2. ^ Oskar Morgenstern, Perfect foresight and economic equilibrium , in: Zeitschrift für Nationalökonomie, Issue 6, 1935, pp. 169-183
3. Hans-Otto Schenk, Marktwirtschaftlehre des Handels , Wiesbaden 1991, pp. 221f., ISBN 3-409-13379-8
4. Hans-Otto Schenk, Markttransparenz , In: Marketing Enzyklopädie, Volume 2, Munich 1974, pp. 825-833
5. ^ Karl Brandt, Information, Market Form and Competition , in: ZHR 127, 1965, p. 201 f.
6. ^ Karl Brandt, Information, Market Form and Competition , in: ZHR 127, 1965, p. 203
7. Andreas Hahn, Oligopolistic Market Dominance in European Merger Control , 2003, p. 232
8. Jörn Kruse, collusion , in: vol WiSt 1995th 11, 1995, p. 569
9. ^ Arnold Picot, Transaction Cost Rate in Organization Theory , in: Die Betriebswirtschaft No. 42, 1982, p. 270
10. Ernst Heuss, Das Oligopol: Ein determinierter Markt , in: Weltwirtschaftliches Archiv, Volume 94 / I, 1960, p. 170
11. Wolfgang Lück (Ed.), Lexikon der Betriebswirtschaft , 1990, p. 780 f.
12. Patrick Schwan, The informed consumer? , 2009, p. 85
13. Janis Beenen: Online retailers are changing prices so rapidly. In: sueddeutsche.de . August 6, 2018, accessed October 13, 2018 .