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Reputation and Prices on the e-Market:Evidence from a Major French Platform

  • Jolivet, Grégory
  • Jullien, Bruno
  • Postel-Vinay, Fabien

The broad aim of this paper is to gain some insight into the quantitative importance of reputation in e-commerce. We use an exhaustive data set from one of France’s largest e-commerce platforms, , to estimate a statistical causal effect of a seller’s reputation (and size) on transaction prices for a uniquely large range of product categories (books, CDs, video games or DVDs), product conditions (used or new) and seller types (individual or professional sellers). We go beyond the results currently available in the empirical literature by tackling the issue of seller unobserved heterogeneity and the weak exogeneity of reputation (and size) in price equations. Our results show large-scale empirical evidence of a significant, positive and strong effect of seller reputation on prices.

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Paper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 13-418.

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Date of creation: Jul 2013
Date of revision: May 2014
Handle: RePEc:tse:wpaper:27407
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  1. Hongbin Cai & Ginger Z. Jin & Chong Liu & Li-An Zhou, 2013. "More Trusting, Less Trust? An Investigation of Early E-Commerce in China," NBER Working Papers 18961, National Bureau of Economic Research, Inc.
  2. Mailath,G.J. & Samuelson,L., 1998. "Who wants a good reputation?," Working papers 19, Wisconsin Madison - Social Systems.
  3. Gabriel Y. Weintraub & C. Lanier Benkard & Benjamin Van Roy, 2008. "Markov Perfect Industry Dynamics With Many Firms," Econometrica, Econometric Society, vol. 76(6), pages 1375-1411, November.
  4. Cynthia G. McDonald & V. Carlos Slawson, 2002. "Reputation in An Internet Auction Market," Economic Inquiry, Western Economic Association International, vol. 40(4), pages 633-650, October.
  5. Tobias J. Klein & Christian Lambertz & Konrad O. Stahl, 2013. "Market Transparency, Adverse Selection, and Moral Hazard," CESifo Working Paper Series 4552, CESifo Group Munich.
  6. Michael Luca, 2011. "Reviews, Reputation, and Revenue: The Case of," Harvard Business School Working Papers 12-016, Harvard Business School.
  7. 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.
  8. Micha�l Dewally & Louis Ederington, 2006. "Reputation, Certification, Warranties, and Information as Remedies for Seller-Buyer Information Asymmetries: Lessons from the Online Comic Book Market," The Journal of Business, University of Chicago Press, vol. 79(2), pages 693-730, March.
  9. Cripps,M.W. & Mailath,G.J. & Samuelson,L., 2002. "Imperfect monitoring and impermanent reputations," Working papers 17, Wisconsin Madison - Social Systems.
  10. Mailath, George J & Samuelson, Larry, 2001. "Who Wants a Good Reputation? Erratum," Review of Economic Studies, Wiley Blackwell, vol. 68(3), pages 714, July.
  11. Steven Tadelis, 1999. "What's in a Name? Reputation as a Tradeable Asset," American Economic Review, American Economic Association, vol. 89(3), pages 548-563, June.
  12. Heski Bar-Isaac, 2003. "Reputation and Survival: Learning in a Dynamic Signalling Model," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 231-251.
  13. Guillermo Ordonez & Andrew Atkeson, 2009. "Optimal Regulation in the Presence of Reputation Concerns," 2009 Meeting Papers 830, Society for Economic Dynamics.
  14. Daniel Houser & John Wooders, 2006. "Reputation in Auctions: Theory, and Evidence from eBay," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(2), pages 353-369, 06.
  15. Bruno Jullien & In-Uck Park, 2009. "Seller Reputation and Trust in Pre-Trade Communication," Levine's Working Paper Archive 814577000000000330, David K. Levine.
  16. Qin Lei, 2011. "FINANCIAL VALUE OF REPUTATION: EVIDENCE FROM THE eBAY AUCTIONS OF GMAIL INVITATIONS," Journal of Industrial Economics, Wiley Blackwell, vol. 59(3), pages 422-456, 09.
  17. W. Bentley MacLeod, 2007. "Reputations, Relationships, and Contract Enforcement," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 595-628, September.
  18. Atkeson, Andrew & Hellwig, Christian & Ordoñez, Guillermo, 2014. "Optimal Regulation in the Presence of Reputation Concerns," CEPR Discussion Papers 10080, C.E.P.R. Discussion Papers.
  19. Mo Xiao & Jiandong Ju & Ying Fan, 2013. "Losing to Win: Reputation Management of Online Sellers," 2013 Meeting Papers 192, Society for Economic Dynamics.
  20. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  21. Ericson, Richard & Pakes, Ariel, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Wiley Blackwell, vol. 62(1), pages 53-82, January.
  22. Daniel W. Elfenbein & Ray Fisman & Brian Mcmanus, 2012. "Charity as a Substitute for Reputation: Evidence from an Online Marketplace," Review of Economic Studies, Oxford University Press, vol. 79(4), pages 1441-1468.
  23. Jeffrey A. Livingston, 2005. "How Valuable Is a Good Reputation? A Sample Selection Model of Internet Auctions," The Review of Economics and Statistics, MIT Press, vol. 87(3), pages 453-465, August.
  24. Carl Shapiro, 1982. "Consumer Information, Product Quality, and Seller Reputation," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 20-35, Spring.
  25. Michael Anderson & Jeremy Magruder, 2012. "Learning from the Crowd: Regression Discontinuity Estimates of the Effects of an Online Review Database," Economic Journal, Royal Economic Society, vol. 122(563), pages 957-989, 09.
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