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Platform-Intermediated Trade with Uncertain Quality

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  • Benjamin E. Hermalin

Abstract

Consider trade conducted via a platform , such as an online app store or a farmers' market. The quality sellers choose for their products affects the surplus trade generates. Because the platform's profit depends on that surplus, the platform can have an incentive to regulate quality. This is true even if quality is observable at time of purchase or if sellers can develop reputations concerning quality. It is also true if the platform charges sellers only; that is, even if the platform has no direct interest in buyers' well-being.

Suggested Citation

  • Benjamin E. Hermalin, 2016. "Platform-Intermediated Trade with Uncertain Quality," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 172(1), pages 5-29, March.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(201603)172:1_5:ptwuq_2.0.tx_2-t
    DOI: 10.1628/093245613X14464471185955
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    References listed on IDEAS

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    Cited by:

    1. Christoph Engel & Urs Schweizer, 2016. "Beyond Privity 33rd International Seminar on the New Institutional Economics June 10-13, 2015, Edinburgh, United Kingdom," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 172(1), pages 1-4, March.
    2. Daniel Göller, 2016. "Platform-Intermediated Trade with Uncertain Quality," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 172(1), pages 30-34, March.

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    More about this item

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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