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Internet Intermediaries' Editorial Content Quality

  • Alexandre Gaudeul

    (University of East Anglia - Norwich)

Information intermediaries deliver information about a supplier's product. They are paid by those same suppliers they certify. This introduces conflicts of interests as the intermediaries want to retain customers by delivering truthful information about suppliers, while suppliers would want the intermediary to provide them with more customers than their quality would otherwise entitle them to. The paper compares two options for information intermediaries: either propose a menu of contracts to the suppliers so that they reveal their type, or find out by themselves the type of the supplier. In the first case, a rent must be left to induce type revelation, in the other, the intermediary must incur a cost to determine the type of the supplier. The paper shows that competition leads to a more frequent use of direct revelation mechanisms at the expense of independent research by the intermediary. The paper contributes to the literature on certification intermediaries in two sided markets by introducing a choice between relying on soft information or acquiring hard information about the side of the market to be certified, and by studying the influence of competition on contract choices in such an extended setting.

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File URL: http://128.118.178.162/eps/io/papers/0409/0409005.pdf
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Paper provided by EconWPA in its series Industrial Organization with number 0409005.

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Length: 43 pages
Date of creation: 17 Sep 2004
Date of revision:
Handle: RePEc:wpa:wuwpio:0409005
Note: Type of Document - pdf; pages: 43
Contact details of provider: Web page: http://128.118.178.162

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  1. Michael D. Smith & Erik Brynjolfsson, 2001. "Consumer Decision-making at an Internet Shopbot: Brand Still Matters," NBER Chapters, in: E-commerce, pages 541-558 National Bureau of Economic Research, Inc.
  2. T. Santos & J. Scheinkman, 2000. "Competition Among Exchanges," Princeton Economic Theory Papers 00s12, Economics Department, Princeton University.
  3. Strausz, Roland, 2004. "Honest Certification and the Threat of Capture," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 25, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  4. Baye, Michael R. & Morgan, John, 2000. "A simple model of advertising and subscription fees," Economics Letters, Elsevier, vol. 69(3), pages 345-351, December.
  5. Simon P. Anderson & Stephen Coate, 2000. "Market Provision of Public Goods: The Case of Broadcasting," NBER Working Papers 7513, National Bureau of Economic Research, Inc.
  6. Guerra, G.A., 2001. "Certification Disclosure And Informational Efficiency: A Case For Ordered Ranking Of Levels," Economics Series Working Papers 9964, University of Oxford, Department of Economics.
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