Market Structure, Reputation, and the Value of Quality Certification

Daniel Elfenbein, Raymond Fisman and Brian McManus

No 20074, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Quality certification programs help consumers to 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 consumer demand varies with market- and seller-level attributes, exploiting quasi-experimental variation in sellers' certification status. The positive effects of eBay's "top rated seller" certification are stronger for categories with relatively few other certified sellers, in more competitive markets, and for sellers with shorter records of past performance. These findings indicate certification provides its greatest value when certification is rare, the product space is crowded, and for sellers lacking established reputations.

JEL-codes: D82 L15 L25 L86 (search for similar items in EconPapers)
Date: 2014-04
New Economics Papers: this item is included in nep-com, nep-cta, nep-ind and nep-mkt
Note: IO
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Published as Daniel W. Elfenbein & Raymond Fisman & Brian McManus, 2015. "Market Structure, Reputation, and the Value of Quality Certification," American Economic Journal: Microeconomics, American Economic Association, vol. 7(4), pages 83-108, November.

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Journal Article: Market Structure, Reputation, and the Value of Quality Certification (2015)
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