Collaborative Market Making

Abstract

Extant work has identified many aspects of market formation including the mechanisms and processes associated with the origins of new markets and the trajectories of market emergence. However, the critical role of interfirm alliances in the formation of new markets still remains unexplored. This chapter brings forward interfirm alliances as a critical tool for firms to fuel the formation of new markets, which are often characterized by high levels of demand, supply, and regulatory uncertainty. To take a systematic look at the role of alliances in market formation, the chapter first describes the different alliance forms under the general categories of dyadic and multipartner alliances. Within these categories, the chapter discusses the potential impact of the respective alliance type on reducing different levels of uncertainty and catalyzing market emergence. It also provides an extensive discussion of the challenges that firms typically face within each type of alliance with regards to market formation. The chapter concludes with directions for future research in exploring alliances as tools for market formation.