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| Adverse Selection and Local Research on the Reputation Mechanism in E-Commerce Market in China: A Case Study of Taobao.com |
| PAN Yong1,QIAO Xiao dong2,2 |
| 1. Henan University of Economics and Law2. |
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Abstract Information asymmetry in e-commerce market causes adverse selection phenomenon that hinders the healthy development of electronic commerce in China. This paper takes transaction data from the perfume market in Taobao.com as samples and analyzes the role of reputation mechanism in e-commerce market. The results show that reputation mechanism can effectively offset adverse selection. However, adverse selection in e-commerce market still exists and seriously affects the function of credit rating system to a certain extent. Based on the defect analysis of the reputation mechanism model in e-commerce market, this paper proposes a modified reputation mechanism model and encourages sellers and buyers to trade honestly for better reputation.
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Received: 26 September 2011
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Corresponding Authors:
PAN Yong
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2012, Vol. 1 
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