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Collective Reputation and Quality in Online Platforms

Author

Listed:
  • Winfree Jason A.

    (Department of Agricultural Economics and Rural Sociology, University of Idaho, P.O. Box 442334, Sixth Street and Rayburn, Moscow, ID 83844-2334, USA)

  • McCluskey Jill J.

    (Professor, School of Economic Sciences, Washington State University, Pullman, WA 99164-6210, USA)

Abstract

This article provides a conceptual framework to understand benefits and costs of private minimum quality standards, increasing seller reputation or warranties when there is a collective reputation for online platforms. Our framework uses a dual reputation model where consumers have a quality expectation based on the reputation of the platform and the reputation of the seller. We also analyze the benefits and costs of various types of fees associated with online platforms and find that the optimal fee structure depends on whether quality concerns or market power concerns are greater. Fees that are fixed, or only depend on quantity, increase market power, but do not hurt product quality. Therefore, they should be used if collective reputation is the main concern. Fees that depend on prices exacerbate bad quality incentives for firms, so they should only be considered if quality is not a concern for consumers. The optimal quality standard depends on the fee structure, as well as the level of compliance to that standard.

Suggested Citation

  • Winfree Jason A. & McCluskey Jill J., 2020. "Collective Reputation and Quality in Online Platforms," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 18(2), pages 1-8, November.
    • Handle: RePEc:bpj:bjafio:v:18:y:2020:i:2:p:8:n:3
    DOI: 10.1515/jafio-2018-0014
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    Cited by:

    1. Jason A. Winfree, 2023. "Collective reputation and food," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(2), pages 666-683, June.

    More about this item

    Keywords

    collective reputation; online platforms;

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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