Bradford described Internet software that finds the lowest price available for books. But we hope the transaction costs will go down more. Here we must distinguish between commodity and specialty, highly engineered steels. The latter require close cooperation between buyer and seller from the earliest phases of product design. But the most efficient way to buy commodity steels is on a central Internet marketplace that lists the product catalogs of as many steelmakers as possible, enabling buyers to search all the available products fast.
Mills can auction off their excess and secondary products.
Buyers can reserve manufacturing time at several mills for fast deliveries. As on the London Metal Exchange, buyers will be able to hedge pricing on futures and options markets. Buyers and sellers will cut logistics costs by on-line negotiations with logistics companies that reduce the number of trucks returning from their runs empty. At Midwest Steel 2000, Levin argued vigorously that e-commerce need not lower prices. Top managers can track negotiations on-line and stop salespeople from discounting.