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The Transaction Cost Economics of Market-based Exchange: The Impact of Reputation and External Verification Agencies

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  • Stephen Standifird
  • Marc Weinstein

Abstract

In this analysis, we empirically investigate market-based transaction costs. We measure market-based transaction costs indirectly by examining variations in market prices when selling Morgan Silver Dollars on eBay. We find that the reputation of both the seller and the coin-rating agency employed significantly influences the price premium obtained. Moreover, we find that the use of a coin-rating agency with a poor reputation proved more damaging than the use of no coin-rating agency. Thus, we find support for the suggestion that the reputation of sellers and third-party verification agencies have a significant influence on perceived market-based transaction costs.

Suggested Citation

  • Stephen Standifird & Marc Weinstein, 2007. "The Transaction Cost Economics of Market-based Exchange: The Impact of Reputation and External Verification Agencies," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 14(3), pages 409-431.
    • Handle: RePEc:taf:ijecbs:v:14:y:2007:i:3:p:409-431
    DOI: 10.1080/13571510701597510
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    Cited by:

    1. Kevin Hasker & Robin Sickles, 2010. "eBay in the Economic Literature: Analysis of an Auction Marketplace," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 37(1), pages 3-42, August.

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