The Transaction Cost Economics of Market-based Exchange: The Impact of Reputation and External Verification Agencies

Stephen Standifird and Marc Weinstein

International Journal of the Economics of Business, 2007, vol. 14, issue 3, 409-431

Abstract: In this analysis, we empirically investigate market-based transaction costs. We measure market-based transaction costs indirectly by examining variations in market prices when selling Morgan Silver Dollars on eBay. We find that the reputation of both the seller and the coin-rating agency employed significantly influences the price premium obtained. Moreover, we find that the use of a coin-rating agency with a poor reputation proved more damaging than the use of no coin-rating agency. Thus, we find support for the suggestion that the reputation of sellers and third-party verification agencies have a significant influence on perceived market-based transaction costs.

Keywords: Transaction Costs; Reputation; Online Auctions (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1080/13571510701597510

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