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Reputation and Certification in Online Shops

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  • Hackl, Franz

    (Department of Economics, Johannes Kepler University, Linz, Austria)

  • Kügler, Agnes

    (Department of Economic Policy and Industrial Economics, Vienna University of Economics and Business, Vienna, Austria)

  • Winter-Ebmer, Rudolf

    (Department of Economics, Johannes Kepler University, Linz, and Institute for Advanced Studies, Vienna, Austria)

Abstract

We investigate the impact of self-organized reputation versus certification by an independent institution on demand for online shops. Using data from a large Austrian price comparison site, we show that quality seals issued by a credible and independent institution increase demand more than feedback-based reputation. This result is important for markets where the market-maker must deal with issues of asymmetric information concerning the quality of goods and services in the market.

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File URL: http://www.ihs.ac.at/publications/eco/es-279.pdf
File Function: First version, 2011
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Bibliographic Info

Paper provided by Institute for Advanced Studies in its series Economics Series with number 279.

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Length: 21 pages
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:ihs:ihsesp:279

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Keywords: Online markets; search engines; signaling; certification; reputation;

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  1. Sanjeev Dewan & Vernon Hsu, 2004. "Adverse Selection In Electronic Markets: Evidence From Online Stamp Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 52(4), pages 497-516, December.
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  5. Auriol, Emmanuelle & Schilizzi, Steven, 2003. "Quality Signaling through Certification. Theory and an Application to Agricultural Seed Market," IDEI Working Papers 165, Institut d'Économie Industrielle (IDEI), Toulouse.
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  14. James W. Roberts, 2011. "Can Warranties Substitute for Reputations?," American Economic Journal: Microeconomics, American Economic Association, vol. 3(3), pages 69-85, August.
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  16. Uwe Dulleck & Franz Hackl & Bernhard Weiss & Rudolf Winter‐Ebmer, 2011. "Buying Online: An Analysis of Shopbot Visitors," German Economic Review, Verein für Socialpolitik, vol. 12(4), pages 395-408, November.
  17. Thomas Cornelissen, 2008. "Using Stata for a memory-saving fixed-effects estimation of the three-way error-components model," German Stata Users' Group Meetings 2008 07, Stata Users Group.
  18. Luis Cabral & Ali Hortacsu, 2006. "The Dynamics of Seller Reputation: Evidence from eBay," Working Papers 06-32, New York University, Leonard N. Stern School of Business, Department of Economics.
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  20. Leland, Hayne E, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality: Comment," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 485-89, December.
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