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Private Ordering on the Internet: The EBay Community of Traders

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  • Baron David P.

    (Stanford University)

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    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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    Bibliographic Info

    Article provided by De Gruyter in its journal Business and Politics.

    Volume (Year): 4 (2002)
    Issue (Month): 3 (November)
    Pages: 1-31

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    Handle: RePEc:bpj:buspol:v:4:y:2002:i:3:n:1

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    Web page: http://www.degruyter.com

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    Web: http://www.degruyter.com/view/j/bap

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    Cited by:
    1. Patrick Bajari & Ali Horta�su, 2004. "Economic Insights from Internet Auctions," Journal of Economic Literature, American Economic Association, vol. 42(2), pages 457-486, June.

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