Remember what it was like to buy a plane ticket in the old days? You told the travel agent where you were going, when you wanted to leave and when you wanted to come home, and the agent told you how much your ticket would cost. Period. If you want to purchase a plane ticket today, you are faced with a vast plethora of choices, and an equally vast plethora of prices. Venture onto an airline’s Web site and you’ll find that their pricing page has a chart with multiple pricing options. It is clear that the existence of the Internet has transformed airline pricing. But what are the implications of this transformation?

The Smith School’s Center for Electronic Markets and Enterprises (CEME) focuses on just such questions as these, exploring the impact of business problems that didn’t exist—weren’t even imagined—20 years ago. CEME studies electronic commerce and enterprises, exploring the impact that information technology has on these markets and the way that markets interact with the Internet. CEME draws on the expertise of faculty from the Smith School and across the University of Maryland to produce research that sheds light on current and potential uses of electronic markets, and the unique problems and challenges that they spawn.

Dynamic pricing is one of those interesting new problems. “Retailers are looking much more like financial markets, like someone taking advantage of arbitrage opportunities. If enough of these arbitrage opportunities exist, it will change the way retailers price and warehouse their goods and services,” says Joseph Bailey, research professor and co-director of the center. Bailey, with co-director G. Anandalingam, professor of decision and information technologies and senior associate dean of the Smith School, set the research direction for CEME.

CEME is sponsored by and partners with such industry leaders as IBM, AT&T, Verizon, IntelSat, and Dell, among others. Sometimes the partnership involves financial support, such as the $2 million grant CEME received from the National Science Foundation. But CEME is just as interested in partnerships that yield data as in ones that yield funding—especially if the data are particularly interesting, unusual or hard-to-find. A recent project with Amazon uses data supplied by the Internet retailing giant to try to determine the true extent of e-commerce activity in the United States. Amazon is interested in the answer to this question because they would like to become a kind of electronic storefront for the very smallest online retailers, who are often overlooked by the Department of Commerce when it compiles information on Internet retailing. CEME’s initial results indicated that the amount of e-commerce in the U.S. may be underestimated by almost $20 billion each year.

Smith faculty have unique expertise in analyzing large data sets, and a number of CEME research projects within the Smith School involve massive data analysis. The study conducted by Wolfgang Jank and Galit Shmueli in the area of online auctions is one such project (see pages 5-6 for the article describing one facet of this research). It uses data from a sniping program as well as data culled from eBay.

Interdisciplinary research is another of the hallmarks of CEME. The University of Maryland’s economics department has faculty members conducting research on auction design, the theory of markets, analytical models of markets, and buyer-seller behavior. The computer science department, University of Maryland Institute for Advanced Computing (UMIACS) and the Institute for Systems Research have associated faculty who study the technology of markets, human-computer interfaces, optimal search algorithms, and data mining.

CEME disseminates its research results through a variety of sources. The CIO Forum is an annual conference that allows researchers, teachers and practitioners to exchange ideas in a dynamic give-and-take series of presentations and panel discussions. Participants come from high-tech firms, financial services companies, consulting companies, manufacturing, service industries, non-profit organizations, and federal, state and local government agencies. CEME also sponsors the Smith School’s annual Netcentricity Conference, which is structured much the same way but focuses on the impact, implications and innovations of digital networks.

Bringing faculty members and industry executives together does more than just publicize new findings. “A lot of the research we do is dependent on the types of problems people bring to us,” says Bailey. “That’s one of the reasons why we find a lot of value in the CIO Forum and Netcentricity Conference. It gives us the opportunity to meet new people with new problems.”

CEME shares research results with the academic and business communities through an annual publication, CEME Reports, and a new quarterly newsletter, which may be viewed online at www.rhsmith.umd.edu/ceme. 

For more information about CEME, please contact jbailey@rhsmith.umd.edu.