Can online markets attract high-quality products?
We study a firm's choice between online and physical markets with respect to product quality. We analyze two contrasting driving forces: On the one hand, online consumers cannot physically inspect the products prior to purchase. This provides the firm with the incentive to hide low-quality products online. On the other hand, consumer reviews and the larger market size may attract higher qualities to the online market. Using a simple yet flexible framework, we show that the firm's choice of a...[Show more]
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