Abstract Are there economic incentives for electronic commerce (e-commerce), or is it just hype? This paper evaluates the cost-based differences between traditional markets (such as retail stores) and electronic markets (e-markets) both from the buyer's (demand side) perspective and the seller's (supply side) perspective. The implications that a shift toward greater electronic market utilization have for transaction intermediaries, interactive service providers (ISPs), and government are discussed. We find that there are significant cost-based differences between traditional and electronic markets for both buyers and sellers, and that electronic markets affect industry structures as well as future sources of organizational revenue.