Market Structure, Reputation, and the Value of Quality Certification
American Economic Journal: Microeconomics
vol. 7,
no. 4, November 2015
(pp. 83-108)
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)Citation
Elfenbein, Daniel W., Raymond Fisman, and Brian McManus. 2015. "Market Structure, Reputation, and the Value of Quality Certification." American Economic Journal: Microeconomics, 7 (4): 83-108. DOI: 10.1257/mic.20130182Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D82 Asymmetric and Private Information; Mechanism Design
- L15 Information and Product Quality; Standardization and Compatibility
- L86 Information and Internet Services; Computer Software
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