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Reputation and Certification in Online Shops

  • Franz Hackl
  • Agnes Kügler

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

  • Rudolf Winter-Ebmer

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.econ.jku.at/papers/2011/wp1116.pdf
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Paper provided by Department of Economics, Johannes Kepler University Linz, Austria in its series Economics working papers with number 2011-16.

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Length: 23 pages
Date of creation: Nov 2011
Date of revision:
Handle: RePEc:jku:econwp:2011_16
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Web page: http://www.econ.jku.at/

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  1. 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.
  2. 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.
  3. Martyn Andrews & Thorsten Schank & Richard Upward, 2006. "Practical fixed-effects estimation methods for the three-way error-components model," Stata Journal, StataCorp LP, vol. 6(4), pages 461-481, December.
  4. 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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  6. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-83, December.
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  8. 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.
  9. Angrist, Joshua D. & Guryan, Jonathan, 2008. "Does teacher testing raise teacher quality? Evidence from state certification requirements," Economics of Education Review, Elsevier, vol. 27(5), pages 483-503, October.
  10. Luanne Lohr, 1998. "Implications of Organic Certification for Market Structure and Trade," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(5), pages 1125-1129.
  11. Glenn Ellison & Sara Fisher Ellison, 2009. "Search, Obfuscation, and Price Elasticities on the Internet," Econometrica, Econometric Society, vol. 77(2), pages 427-452, 03.
  12. John Morgan & Tanjim Hossain, 2006. "...plus shipping and handling: Revenue (non) equivalence in field experiments on ebay," Natural Field Experiments 00270, The Field Experiments Website.
  13. Gregory Lewis, 2011. "Asymmetric Information, Adverse Selection and Online Disclosure: The Case of eBay Motors," American Economic Review, American Economic Association, vol. 101(4), pages 1535-46, June.
  14. 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.
  15. Bajari, Patrick & Hortacsu, Ali, 2003. " The Winner's Curse, Reserve Prices, and Endogenous Entry: Empirical Insights from eBay Auctions," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 329-55, Summer.
  16. Lu�S Cabral & Ali Horta�Su, 2010. "THE DYNAMICS OF SELLER REPUTATION: EVIDENCE FROM EBAY -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 58(1), pages 54-78, 03.
  17. 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.
  18. John M. Crespi & St)phan Marette, 2001. "How Should Food Safety Certification be Financed?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(4), pages 852-861.
  19. 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.
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