Returns on Reputation in Retail E-Commerce
The industrial organization literature suggests that firms invest in reputation to earn price premiums. Data from online auctions has revealed that sellers are able to earn returns on their reputations. This paper examines online retail markets from the same perspective. The author's study, data from the markets of homogeneous consumer products listed in pricegrabber.com in May 2008 is analyzed with a hierarchical regression model using OLS and quantile regression. Contrary to online auctions, the results indicate that in general, sellers do not earn returns on reputation in retail e-commerce.