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Reputation premium and reputation management: Evidence from the largest e-commerce platform in China

Ying Fan (), Jiandong Ju and Mo Xiao

International Journal of Industrial Organization, 2016, vol. 46, issue C, 63-76

Abstract: We study the life-cycle effects of reputation using a panel data set consisting of a 25% random sample of all sellers on China's largest e-commerce platform, We find a substantial return to reputation, but only for established sellers. New sellers, in contrast, lower their prices to boost transaction volume and ratings. This reputation management by new sellers leads to a decrease in their revenue in the short run and even a decrease in their business' survival likelihood in the longer run. We show that such differential effects at different stages of a seller's business life-cycle can arise when the effect of reputation on future payoffs dominates that on current payoffs.

Keywords: Reputation management; Reputation dynamics; E-commerce (search for similar items in EconPapers)
JEL-codes: L14 L15 L81 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1016/j.ijindorg.2016.01.004

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International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal

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Handle: RePEc:eee:indorg:v:46:y:2016:i:c:p:63-76