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Private Ordering on the Internet: The EBay Community of Traders

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Author Info
David P. Baron (Stanford University)
Abstract

eBay provides an online auction venue for remote and anonymous members of its online community to realize gains from trade. As a venue it never sees the items sold, verifies the item listings, handles settlements, or represents the buyer or seller. Despite the associated market imperfections and incentive problems, over five million auctions are active on an average day. Trading is based on trust among members of the eBay community, and trust is supported by a multilateral reputation mechanism based on member feedback. eBay supplements the reputation mechanism with rules and policies that mitigate incentive problems, reduce transactions costs, and support trust among members and between members and the company. Reputations and the rules and policies provide a private ordering of eBay's community. This paper examines this private ordering in the context of the company's strategy and in the shadow of the public order.

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Publisher Info
Article provided by Berkeley Electronic Press in its journal Business and Politics.

Volume (Year): 4 (2002)
Issue (Month): 3 ()
Pages: 245-274
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Handle: RePEc:bep:buspol:4:2002:3:245-274

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Banner, Stuart, 1998. "The Origin of the New York Stock Exchange, 1791-1860," Journal of Legal Studies, University of Chicago Press, vol. 27(1), pages 113-40, January.
  2. Kandori, Michihiro, 1992. "Social Norms and Community Enforcement," Review of Economic Studies, Blackwell Publishing, vol. 59(1), pages 63-80, January. [Downloadable!] (restricted)
  3. Daniel Houser & John Wooders, 2006. "Reputation in Auctions: Theory, and Evidence from eBay," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 15(2), pages 353-369, 06. [Downloadable!] (restricted)
  4. Shyam NMI Sunder & Rong-Ruey Duh & Karim Jamal, 2002. "Control and Assurance in E-Commerce: Privacy, Integrity, and Security at eBay," Yale School of Management Working Papers ysm316, Yale School of Management. [Downloadable!]
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  5. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-48, June. [Downloadable!] (restricted)
  6. Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-41, August. [Downloadable!] (restricted)
  7. Shapiro, Carl, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, MIT Press, vol. 98(4), pages 659-79, November. [Downloadable!] (restricted)
  8. Carl Shapiro, 1982. "Consumer Information, Product Quality, and Seller Reputation," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 20-35, Spring. [Downloadable!] (restricted)
  9. Doug Bryan & David Lucking-Reiley & Naghi Prasad & Daniel Reeves, 2000. "Pennies from eBay: the Determinants of Price in Online Auctions," Econometric Society World Congress 2000 Contributed Papers 1736, Econometric Society. [Downloadable!]
  10. Woodruff, Christopher, 1998. "Contract enforcement and trade liberalization in Mexico's footwear industry," World Development, Elsevier, vol. 26(6), pages 979-991, June. [Downloadable!] (restricted)
  11. Clay, Karen, 1997. "Trade without Law: Private-Order Institutions in Mexican California," Journal of Law, Economics and Organization, Oxford University Press, vol. 13(1), pages 202-31, April.
  12. Doug Bryan & David Lucking-Reiley & Naghi Prasad & Daniel Reeves, 1999. "Pennies from eBay: The Determinants of Price in Online Auctions," Working Papers 0003, Department of Economics, Vanderbilt University, revised Jan 2000. [Downloadable!]
  13. Patrick Bajari & Ali Hortacsu, 2000. "Winner's Curse, Reserve Prices and Endogenous Entry: Empirical Insights from eBay Auctions," Econometric Society World Congress 2000 Contributed Papers 1927, Econometric Society. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Eric Brousseau & Thierry Penard, 2007. "The Economics of Digital Business Models: A Framework for Analyzing the Economics of Platforms," Review of Network Economics, Concept Economics, vol. 6(2), pages 81-114, June. [Downloadable!]
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