Quality Uncertainty and Market Efficiency in E-commerce

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Title: Quality Uncertainty and Market Efficiency in E-commerce
Author: Kai, Zhan
Contributor: University of Helsinki, Department of Political Science
Thesis level: Master's thesis
Abstract: This research is focused on the quality uncertainty and market efficiency in E-commerce. The purpose of this study is to analyse the economics of lemons market in electronic commerce. In addition, I try to find methods to deal with this problem. Electronic commerce is presenting an exciting opportunity to reduce transaction costs, but its future may depend on how non-technological but fundamentally economic issues such as the lemons problems are solved, or it will essentially lead to the market failure. Repeat purchases play an important role in my analysis. In my opinion, one of the main reasons why electronic commerce players are losing money is because high-quality products cannot receive higher prices in high-quality markets. Due to lack of sufficient informed consumers, firms have to spend on dissipative advertising to signal product quality and consumers have to pay higher prices for high-quality products. By so doing, market efficiency cannot achieve. Thus, how to make consumers informed is the core of the problem of resolving lemons problems. I suggest that electronic intermediaries may provide information about product quality to consumers and reduce quality uncertainty. Actually, none of price, advertising and intermediaries is reliable to signal product quality. In order to reduce quality uncertainty and improve market efficiency, sellers are responsible to provide adequate information to buyers. Similarly, buyers should inform their preferences and tastes to sellers. My hope is that lemons could be turned into lemonade.
Description: Endast sammandrag. Inbundna avhandlingar kan sökas i Helka-databasen (http://www.helsinki.fi/helka). Elektroniska kopior av avhandlingar finns antingen öppet på nätet eller endast tillgängliga i bibliotekets avhandlingsterminaler.Only abstract. Paper copies of master’s theses are listed in the Helka database (http://www.helsinki.fi/helka). Electronic copies of master’s theses are either available as open access or only on thesis terminals in the Helsinki University Library.Vain tiivistelmä. Sidottujen gradujen saatavuuden voit tarkistaa Helka-tietokannasta (http://www.helsinki.fi/helka). Digitaaliset gradut voivat olla luettavissa avoimesti verkossa tai rajoitetusti kirjaston opinnäytekioskeilla.
URI: http://hdl.handle.net/10138/10874
Date: 2003-10-13
Subject: assymmetrical information
lemons market
internet advertising

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