Designing IT-Supported Market Mechanisms for Organizational Coordination

Markets have always taken a prominent place in Professor Andrew Whinston’s research. In his earlier work, for example, he concentrated on finding conditions under which resources can be allocated in a non-convex economy, although economists had raised questions about the applicability of markets in such an economy. In later research, he also applied the market idea to non-conventional application areas. Some of the most influential research is in the area of developing models and methods for real-time problem solving and resource management in computer networks. His most recent research, recognizing the potential opportunities the networked environment provides to companies, has taken the market idea to the internal economy of organizations: how to design IT-supported coordination systems for organizational resource allocation. In this essay, we discuss some issues that differentiate IT-supported internal markets from IT-supported commerce between different companies. We then draw on recent research by Dr. Whinston and his colleagues on market mechanisms to illustrate how such systems might be designed.