Bitte verwenden Sie diesen Link, um diese Publikation zu zitieren, oder auf sie als Internetquelle zu verweisen: https://hdl.handle.net/10419/96029 
Erscheinungsjahr: 
2011
Schriftenreihe/Nr.: 
Working Paper No. 2011-04
Verlag: 
Bar-Ilan University, Department of Economics, Ramat-Gan
Zusammenfassung: 
One striking development associated with the explosion of e-commerce is the increased transparency of sellers' quality history. In this paper we analyze how this affects firms' incentives to invest in quality when the outcome of investment is uncertain. We identify two conflicting effects. On the one hand, reducing the consumer's cost of search for quality exacerbates the negative effects of past poor performance. This increases incentives to invest, leading to higher quality. On the other hand, the fact that a firm, despite its best efforts, may fail to live up to consumers' more demanding expectations, makes investment less attractive. This discourages investment, leading to lower quality. We show that reducing the search cost leads to higher quality if the initial level of the search cost is sufficiently high but may lead to lower quality if the initial level of the search cost is sufficiently low.
Schlagwörter: 
search
internet search
quality
risky investment
JEL: 
D83
L15
Dokumentart: 
Working Paper

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