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Market Structure, Reputation, and the Value of Quality Certification

Author

Listed:
  • Daniel W. Elfenbein
  • Raymond Fisman
  • Brian McManus

Abstract

Quality certification programs help consumers identify high-quality products or sellers in markets with information asymmetries. Using data from eBay UK's online marketplace, we study how certification's impact on demand varies with market- and seller- level attributes, exploiting variation in sellers' certification status within groups of near-identical listings. The positive effects of eBay's "top rated seller" certification are stronger for categories with few other certified sellers, in more competitive markets, and for sellers with shorter records of past performance. These findings indicate certification provides more value when certification is rare, the product space is crowded, and for sellers lacking established reputations. (JEL D12, D82, L15, L86)

Suggested Citation

  • Daniel W. Elfenbein & Raymond Fisman & Brian McManus, 2015. "Market Structure, Reputation, and the Value of Quality Certification," American Economic Journal: Microeconomics, American Economic Association, vol. 7(4), pages 83-108, November.
    • Handle: RePEc:aea:aejmic:v:7:y:2015:i:4:p:83-108
    Note: DOI: 10.1257/mic.20130182
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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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    1. Market Structure, Reputation, and the Value of Quality Certification (AEJ:MI 2015) in ReplicationWiki

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