Reputation and certification in online-shops

Abstract

This paper discusses the impact of seals of quality in e-tailing shops on consumerbehavior by using data acquired from the online price search engine geizhals.at.This price comparison site covers most of the Austrian e-tailing market. The main question is if the self-organized retailer evaluation mechanism provided by the search engine is suffcient to overcome the intrinsic information inequality experienced by consumers or if other instruments, like seals of quality are needed to provide additional signaling methods for sellers. The demand for a product cannot be measured directly, so the concept of 'Last-Click-Through' is used as a proxy. In total the dataset covers three dimensions, namely time, firms and products, which need to be considered in the modeling process. Therefore fixed effect estimations are performed, also considering the endogeneity problem caused by the nature of demand models.