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In order to ensure the continuing expansion and success of electronic commerce, the issue of how to assess product quality of items sold over the Internet must be addressed. The formal literature of microeconomics presents a conceptual framework for this assessment that is applied in the case study presented in this paper. The type of transaction studied is online auction transactions conducted through the popular web site, eBay. Quality issues, as well as other sources of buyer dissatisfaction with electronic purchases, are addressed on eBay through a bulletin board style feedback system by which members of the eBay community may report on various aspects of their eBay transactions. eBay publishes the feedback ratings of each seller as a part of its listing of any item for sale and also disciplines sellers that accumulate too much negative feedback. This would seem to provide buyers with some degree of protection from sellers who are unscrupulous in their claims regarding product quality. The empirical work presented here examines the effectiveness of this system using logistic and ordinary least squares regression, and concludes that at least key aspects of the system offer adequate incentives to sellers to provide accurate representations to buyers regarding the quality of their merchandise.

In this paper, the author examines how capital structure (relative to target) affects firm innovation.

The author uses cross-sectional OLS regressions (for each year of data) to determine whether a firm is above or below its target debt level (in that year) and then uses fixed effects OLS regressions with panel data to examine the impact of having leverage above or below the firm's target on its innovation activity.

The author shows that firms with below-target debt innovate more in terms of number of patents granted and have better quality innovations in terms of citation counts of patents and in terms of economic value of patents. The results hold for sample splits based on firm age, firm size and access to external finance. The author also shows that the findings are not driven by the negative correlation between leverage and innovation measures. Overall, the results indicate that it is not the actual level of leverage that impacts innovation; the relevant factor that impacts firm innovation is whether a firm is above or below its leverage target.

The author extends the literature on financing innovation by linking leverage target with firm innovation. Findings of this paper also provide supporting evidence that capital structure plays an important role on firm innovation and supplements prior literature that shows the importance of debt in financing firm innovation.

The purpose of this paper is to evaluate the role of social capital in a microfinance contract.

Systematic review of the theoretical and empirical literature on the role of social capital in microfinance.

The theoretical literature has shown using models of peer selection, peer monitoring and peer pressure that group lending with joint liability overcomes both the informational and enforcement failures present in credit markets for poor. However findings from the empirical literature conclude that social capital should not be taken as a single concept but should be considered in light of its different aspects which may be having different effects on the performance. For example, the trust between the borrowers, cultural and social homogeneity has been found to have more significant affect on repayment performance in contrast to the incentives due to peer pressure. The groups formed by family members and relatives are consistently been reported to have weakening influence on repayment.

For a same program the effect of social capital on performance can be different for different geographies and different classification of subjects and thus should be studied before initiating a microfinance program in any social setting.

The borrowers should be encouraged to form groups with others who are more trustworthy and not with those they are just having an acquaintance with. The borrowers should be encouraged to come to aid of those who are victims of negative externalities. The positive experiences will lead to reciprocity of actions in future. The borrowers should be discouraged to form groups with family members and relatives.

It analyzes both theoretical and empirical literature by disentangling different aspects of social capital within groups and their effects on group performance.

This paper aims to study whether the recycling of a third party competes with the trade-in service of a manufacturer, and explores the optimal trade-in and third-party collection authorization strategies for the manufacturer.

According to whether to authorize a third party to collect its used products, the manufacturer has two choices: one is not authorization (NA); the other is authorization (A). This paper uses profit-maximization model to investigate the optimal decisions of the manufacturer and the third party under NA and A, respectively, and then explores which choice is better for the manufacturer.

It is observed that there is a competition between trade-in service and third-party recycling when the durability parameter of the used product is relatively small. Moreover, when the durability parameter of the used product is relatively large, A is always better choice for the manufacturer; otherwise, NA is a better choice except for the case that the unit trade-in subsidy is low and the salvage of the used product is high.

These results provide managerial insights for the manufacturer and the third party to make decisions in the field of recycling.

This paper is among the first papers to study the competition between trade-in program and third party’s collecting program under government’s trade-in subsidy policy. Moreover, this paper presents the conditions under which the manufacturer should authorize or not authorize the third party to collect its used products.

Platform certification constitutes an effective mechanism for managing the lemon problem concerning food e-commerce. This work aims to evaluate the market effect of platform certification and analyzes its correction mechanism for lemon problem combined with reputation mechanism.

Utilizing the Gold Seller certification of Taobao.com to serve as an illustration, the authors conducted an empirical study based on the sales data of hairy crabs among 2,239 sample sites over six points in time from October to December 2019, systematically examining the market effect of food e-commerce platform certification along with the interaction between food e-commerce platform certification and reputation mechanisms, followed by a heterogeneity test by product price.

This study finds that sellers with platform certification can significantly increase their sales. The market effect of platform certification is more easily observed in the low-price product market. In addition, platform certification and reputation mechanisms have complementary effects. In a low-price product market, the complementary effect of platform certification and product reputation diminishes, while the complementary effect of platform certification and seller reputation disappears.

This study explores the market effect of food e-commerce platform certification, reveals the market effect of certification mechanism when multiple signaling mechanisms exist simultaneously and conducts an empirical test based on real market data. It provides a better comprehension of how platform certifications work in food e-commerce.

The purpose of this paper is to analyse the structural effects of public sector catering tender procedures and suggests improvements that would benefit clients, users and small catering firms. The essential problem is that current tender procedures have the effect of limiting clients' knowledge of possible quality and cost configurations. Thus clients are unable to reveal their preferences in tender specifications, and so bidders bid low prices and low quality.

The approach is an analysis of current procedures using concepts from market structure and asymmetric information.

The main finding is that low prices and low quality are the norm because information relating to price is more complete than information relating to quality, and because not all interested parties participate in the decision making. In addition, present procedures probably favour larger firms.

Cases of appropriate quality are not available for observation precisely because of the “lemons” problem: appropriate and better quality are driven from the market because of the nature of existing structures and procedures.

The implications of the research are that procedures should be changed in order to provide incentives for both sides to release information regarding possible configurations and preferences. The most important recommendation is that the bidding process should be undertaken in two rounds. The first round would reveal possible quality/cost configurations while the second would determine the price, as in a standard sealed bid auction.

The paper explores a problem that is of practical importance using economic theory often regarded as rather abstract.

Most of the research on collaborative consumption platforms (CCPs) has focused on motivational drives, and little research has been conducted on the problem of unbalanced information sharing, also known as the “lemons problem,” and signals. The paper aims to discuss these issues.

This study conducted a netnography and an experiment.

The netnographic study showed that participants tend to use low ratings and negative reviews as cues implying more searches, use ratings as an anchor to adjust other information, and employ differing cognitive information-processing styles. The experimental results show that, in a normal environment (when ratings are high), visualizers (verbalizers) have more of an intention to use CCPs when they are exposed to abundant pictures (textual cues); however, when the cues lead to a further information search (when the ratings are low), this search behavior pattern is reversed: visualizers (verbalizers) have more of an intention to use CCPs when they are exposed to abundant textual cues (pictures).

This study extends previous research by showing that people frequently use differing heuristics depending on the context; that ratings have an anchoring effect and guide people in selecting a signal to use and condition how they use it; and that visualizers prefer text cues to pictorial cues when trying to make informed decisions under a condition that points to a further information search. These results are opposite of previous assertion.

Marketers are advised to provide a mechanism by which users can extract the cues they need and reduce the less urgent ones; devise a mechanism that screens participants and divides them into two categories: those who post honest evaluations and those who do not; and reduce the opportunistic behaviors of partners on both sides.

The current study addresses consumers’ use of information posted by other consumers on CCPs and demonstrates that participants use low ratings and negative reviews as cues implying more searches, use ratings as an anchor to adjust other information, and employ differing cognitive information-processing styles. Previous research rarely addressed these information search behaviors of consumers on CCPs.

A major transformation in retail logistics over the few years is backed by enormous improvements in internet technologies. It is now easy for e-retailers to entertain delivery progression, or consumers can share use-experience with future customers and thereby reducing information asymmetry. The purpose of this paper is to investigate the effect of different signals on consumer behavior in the presence of information asymmetry, in the context of online group buying (OGB) markets in China.

Based on the lemon market theory (LMT) and signaling theory, the study develops a research model of the OGB consumers’ context in China, which is validated using data from an online survey. A total of 528 responses are used for data analysis applying structural equation modeling technique.

The findings of the study show that perceived vendor quality (PVQ) and perceived product quality (PPQ) have significantly positive effects on intention to purchase from OGB websites. PVQ is associated with perceived reputation and perceived trustworthiness (PT) of vendor, and the determinants of PPQ are quality assurance information of products, and information about mer-chants. Further, PT has a mediating effect, while asymmetry of information has a moderating effect.

The research model is valid as a generic OGB model that can be investigated in other contexts to understand the generalizability of the findings. Future research is needed to incorporate additional relevant factors (e.g. price, advertising activity/investments) that may help increase the acceptability of the model to a wide range of e-commerce contexts. Two of the control variables (gender and prior internet experience) were found to be significant; this could be further examined in future studies to determine the relative impact on each causal relationship.

Whereas prior studies in the domain of consumer service proposed different signaling mechanisms that were believed to eliminate information asymmetry from a market, the study sheds light on the effectiveness of the signals in the OGB context. This is a unique effort that applies and extends LMT and signaling theory in OGB context by theorizing the associated dimensions and their causal effects.

A regulatory wave will follow the current financial turmoil. The purpose of this paper is to warn that although new regulation is necessary, there is a danger of strangulation of the financial market which can only be avoided with a paradigm shift in the way data are collected and used.

The paper is based on more than 20 years of experience in the field of all types of financial analysis within banks. The idea has been laid down in a doctoral thesis which has been applied in more than 200 banks successfully, including the acceptance by regulators.

Regulators in order to be successful and to regain eye level contact with banks have to use similar techniques as used today within risk management departments or related areas. In addition, however, regulators have to enforce standards especially for the representation of financial contracts, which are called contract types (CT). This would create the long missing international financial language that can be understood by all market participants improving not only the communication between banks and regulators, but also inside the banking sector and the investor community. Within single banks, it would help overcoming the now prevalent silo architecture and mentality.

Such a standard would increase the quality of information drastically and reduce the cost in similar magnitudes not only for the regulator but also for the whole financial community as a whole. The “lemon problem” (Akerlof) responsible for much of the present problems could be drastically reduced.

This paper closes an important gap towards the development of an international financial language via a standardized parametric representation of financial contracts (CT) is closed.

This paper focuses on the potential advantages of strategic investment models in examining firm investment behavior. Strategic investment models are derived from rigorous modeling techniques grounded on formal analytical models, and they have been widely applied in corporate finance and economics to examine the problem of firm underinvestment. In this paper, we present an overview of strategic investment models, including empirical applications that highlight their methodological strengths. We conclude that the empirical application of such investment models in the context of strategic management research presents research opportunities in many new directions.