Final answer:
Horizontal exchanges are many-to-many e-marketplaces for purchasing indirect materials that are widely used across various industries. They are different from private and vertical exchanges which are more industry or company-specific. While horizontal exchanges are based on the principle of voluntary exchange, they need careful consideration when the transactions have externalities.
Step-by-step explanation:
The many-to-many e-marketplaces for indirect materials, such as office supplies, light bulbs, and cleaning materials used by any industry, are known as Horizontal exchanges. These platforms facilitate the trade of non-strategic, commodity-like products that are common across multiple industries. Unlike private exchanges that are tailored to specific companies or vertical exchanges that are focused on specific industries, horizontal exchanges address a broader market need.
The principle of voluntary exchange underlines that these transactions are mutually beneficial, allowing for an efficient allocation of resources and satisfying both the buyer and seller. However, when a voluntary exchange has externalities, that is, when it affects individuals not directly involved in the transaction (a third party), this can lead to concerns that need additional consideration and potentially, regulatory responses.