Returns on reputation in retail e-commerce

Abstract

This paper examines the effect of a seller’s reputation on pricing in retail e-markets. Our data comprises price quotations from over 6000 markets of homogeneous consumer products listed in Pricegrabber. We model seller reputations as a combination of the aggregate rating scores and ratings histories which are provided by consumers in Pricegrabber’s feedback mechanism. We analyze this data with standardized variables regression. The results indicate that there are some positive returns on reputation for different seller types which could also explain price dispersion in e-markets.