What Drives Fraud in a Credence Goods Market? – Evidence from a Field Study

20 Pages Posted: 8 May 2018

See all articles by Alexander Rasch

Alexander Rasch

University of Cologne

Christian Waibel

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich

Date Written: June 2018

Abstract

This paper investigates the impact of competition on an expert firm's incentive to defraud its customers in a credence goods market. Controlling for the competence of car repair shops, their financial situation, and reputational concerns, we use and complement the data set from a nationwide field study conducted by the German Automobile Association that regularly checks the reliability of garages in Germany. We find that more intense competition lowers a firm's incentive to defraud its customers.

Suggested Citation

Rasch, Alexander and Waibel, Christian, What Drives Fraud in a Credence Goods Market? – Evidence from a Field Study (June 2018). Oxford Bulletin of Economics and Statistics, Vol. 80, Issue 3, pp. 605-624, 2018, Available at SSRN: https://ssrn.com/abstract=3174995 or http://dx.doi.org/10.1111/obes.12204

Alexander Rasch (Contact Author)

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Christian Waibel

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland

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