Market Structure, Reputation, and the Value of Quality Certification

55 Pages Posted: 28 Apr 2014 Last revised: 30 May 2014

See all articles by Daniel W. Elfenbein

Daniel W. Elfenbein

Washington University in St. Louis - John M. Olin Business School

Raymond J. Fisman

National Bureau of Economic Research (NBER); Boston University

Brian McManus

University of North Carolina (UNC) at Chapel Hill - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 2014

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.

Suggested Citation

Elfenbein, Daniel W. and Fisman, Raymond and McManus, Brian, Market Structure, Reputation, and the Value of Quality Certification (April 2014). NBER Working Paper No. w20074. Available at SSRN: https://ssrn.com/abstract=2430069

Daniel W. Elfenbein (Contact Author)

Washington University in St. Louis - John M. Olin Business School ( email )

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Raymond Fisman

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Boston University ( email )

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Boston, MA 02215
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Brian McManus

University of North Carolina (UNC) at Chapel Hill - Department of Economics ( email )

Chapel Hill, NC 27599
United States

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