Online Trading and Adverse Selection in Smartphone Market

Fulgence Dominick Waryoba ()

Academic Journal of Economic Studies, 2018, vol. 4, issue 4, 96-101

Abstract: Information asymmetry that dominates almost all market operations deters market performance and in some markets may lead into non-existence of market due to adverse selection problem. This paper hypothesizes that online trading reduces adverse selection problem in Smartphone market. The findings show that high quality Smart phones sell more than low quality Smart phones. Therefore, trading online induces signaling which reduces the problem of information asymmetry thereby offsetting adverse selection problem.

Keywords: Information asymmetry; adverse selection; signaling (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:khe:scajes:v:4:y:2018:i:4:p:96-101

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