Date Added: Jan 2010
The objective is to examine how online communities affect the functioning of markets for durable goods with particular emphasis on markets that are both fragmented and diverse. The thesis is that online communities have the potential to make relatively inefficient fragmented markets more efficient. This effect will manifest itself through the observed pricing for the goods in both standard commercial settings and in internet exchange institutions. A secondary effect of the online communities should be to amplify the impact of quality (as perceived by the user) on market transactions. The paper concludes with an analysis of the foundations of credibility for user-generated content within online communities.