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Can online markets attract high-quality products?

Chen, Pu; Chen, Yijuan; Hu, Xiangting; Li, Sanxi

Description

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]

CollectionsANU Research Publications
Date published: 2015
Type: Journal article
URI: http://hdl.handle.net/1885/76857
Source: Economic Modelling
DOI: 10.1016/j.econmod.2015.07.010

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