Title: Eliminating the cyber 'lemons' problem with the e-reputation in e-commerce market: theoretical model and practice

Authors: Yong Pan

Addresses: Department of Logistics and E-Commerce, Henan University of Finance and Economics, No. 80 Wenhualu Road, Zhengzhou 45002, China

Abstract: Well reputation has a very important effect in eliminating |lemons| problem that results from informational asymmetry. Its essence is to establish the trust between buyers and sellers. Based on the |lemons| principle put forward by US economist George Akerlof who is one of Nobel Economics Prize Laureates in 2001, this paper set up an e-reputation model in e-commerce market, and analyse the mechanism of the e-reputation in order to offer a strategic thought for eliminating the cyber |lemons| problem with the e-reputation. The author also puts forward some ideas and concepts such as |separating equilibrium|, |e-reputation rent| and |chains of e-reputation|. For providing empirical evidence, the paper discusses the cases from AUCNET (Japan) and TAOBAO (China).

Keywords: informational asymmetry; lemon problem; e-reputation chains; electronic reputation; cyber problems;e-business; electronic business; e-commerce; electronic commerce; trust; buyers; sellers; George Akerlof; separating equilibrium; e-reputation rent; AUCNET; Japan; TAOBAO; China; used-cars; network auctions; online trading; networks; virtual organisations; web based organisations; online organisations; networking; world wide web; internet.

DOI: 10.1504/IJNVO.2011.039993

International Journal of Networking and Virtual Organisations, 2011 Vol.8 No.3/4, pp.182 - 191

Published online: 21 Feb 2015 *

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