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Buyers of ‘lemons’: How can a blockchain platform address buyers’ needs in the market for ‘lemons’?

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Listed:
  • Liudmila Zavolokina

    (University of Zurich)

  • Gianluca Miscione

    (University College Dublin)

  • Gerhard Schwabe

    (University of Zurich)

Abstract

The second-hand automotive market is one with the least trust from consumers. Customers on the second-hand car market suffer from such problems as the car being in worse condition than initially indicated, accident damage that is not disclosed, fraud, etc. Akerlof, described the market for used cars as an example of the problem of information asymmetries and resulting quality uncertainty. In order to cope with quality uncertainties, used car buyers actively engage themselves in information seeking. Blockchain technology promises to automatize the tracking of cars through their lifecycles and provide reliable information at any point in time it is needed. In our study, we investigate the problems car buyers face during information seeking and propose requirements for the design of a blockchain-based system to address these.

Suggested Citation

  • Liudmila Zavolokina & Gianluca Miscione & Gerhard Schwabe, 2020. "Buyers of ‘lemons’: How can a blockchain platform address buyers’ needs in the market for ‘lemons’?," Electronic Markets, Springer;IIM University of St. Gallen, vol. 30(2), pages 227-239, June.
    • Handle: RePEc:spr:elmark:v:30:y:2020:i:2:d:10.1007_s12525-019-00380-9
    DOI: 10.1007/s12525-019-00380-9
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    References listed on IDEAS

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    1. Jason Kuruzovich & Siva Viswanathan & Ritu Agarwal, 2010. "Seller Search and Market Outcomes in Online Auctions," Management Science, INFORMS, vol. 56(10), pages 1702-1717, October.
    2. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    3. Benedikt Notheisen & Jacob Benjamin Cholewa & Arun Prasad Shanmugam, 2017. "Trading Real-World Assets on Blockchain," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 59(6), pages 425-440, December.
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    Cited by:

    1. Bauer, Ingrid & Schwabe, Gerhard, 2023. "Value Capturing from Tokenized Asset Histories," Die Unternehmung - Swiss Journal of Business Research and Practice, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 77(1), pages 4-23.

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    More about this item

    Keywords

    Blockchain; Market for lemons; User needs;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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