Designing On-Line Mediation Services for C2C Markets

Authors:
Xia Zhao;Fang Fang;Andrew B. Whinston
Affiliations:
University of Texas, Austin;California State University, San Marcos;University of Texas, Austin
Venue:
International Journal of Electronic Commerce
Year:
2006

Citing 7
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Abstract

This paper proposes an on-line mediation services (OMS) mechanism to alleviate the consequences of asymmetric information for traders in C2C markets. In an adverse-selection setting, the mechanism facilitates on-line transactions by (1) inducing traders to negotiate efficiently in the presence of ex post discrepancy, and (2) enabling sellers with higher probability of selling a high-quality product to signal their superiority and enjoy a price premium. The mechanism can also be implemented as a profitable business model.