Reputation premium and reputation management: Evidence from the largest e-commerce platform in China

Ying Fan, Jiandong Ju, Mo Xiao

Research output: Contribution to journalArticlepeer-review

22 Scopus citations

Abstract

We study the life-cycle effects of reputation using a panel data set consisting of a 25% random sample of all sellers on China's largest e-commerce platform, Taobao.com. We find a substantial return to reputation, but only for established sellers. New sellers, in contrast, lower their prices to boost transaction volume and ratings. This reputation management by new sellers leads to a decrease in their revenue in the short run and even a decrease in their business' survival likelihood in the longer run. We show that such differential effects at different stages of a seller's business life-cycle can arise when the effect of reputation on future payoffs dominates that on current payoffs.

Original languageEnglish (US)
Pages (from-to)63-76
Number of pages14
JournalInternational Journal of Industrial Organization
Volume46
DOIs
StatePublished - May 2016

Keywords

  • E-commerce
  • Reputation dynamics
  • Reputation management

ASJC Scopus subject areas

  • Industrial relations
  • Aerospace Engineering
  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)
  • Strategy and Management
  • Industrial and Manufacturing Engineering

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