Information asymmetry and small business in online auction market

This paper explores how seller reputation affects auction prices using detailed Taiwanese data. Our empirical results show that returns to reputation are nonlinear and differ considerably across different reputation scores. Marginal returns to scores drop sharply after the first reputation quartile,...

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Bibliographic Details
Published in:Small business economics 2010-05, Vol.34 (4), p.433-444
Main Authors: Sun, Chia-Hung, Liu, Kang E.
Format: Article
Language:English
Subjects:
Asymmetric information
Asymmetry
Auction markets
Auctions
Bidding
Bids
Business and Management
Business reputation
Cybercrime
Econometrics
Electronic commerce
Entrepreneurs
Entrepreneurship
Fraud
Industrial Organization
Information asymmetry
Internet
Management
Market analysis
Market prices
Microeconomics
Portable media players
Pricing
Regression analysis
Reputations
Search engines
Shipping costs
Small & medium sized enterprises-SME
Small and medium sized enterprises
Small business
Small businesses
Studies
Taiwan
Variables
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Summary:This paper explores how seller reputation affects auction prices using detailed Taiwanese data. Our empirical results show that returns to reputation are nonlinear and differ considerably across different reputation scores. Marginal returns to scores drop sharply after the first reputation quartile, indicating that building up sellers' reputation is extremely important, especially in the early stage. Our study reveals that the mechanism of seller reputations is effective in mitigating asymmetric information in online auctions.
ISSN:0921-898X
1573-0913
DOI:10.1007/s11187-008-9160-8