Reputation in China’s online auction market: Evidence from Taobao.com

Abstract

Using data on prepaid cards for an online game listed on Taobao.com, this paper examines the impact of sellers’ reputation on their sales in China’s online market. It is found that sellers’ good reputation has a positive impact on their sales volume, but the marginal effect of this impact decreases severely. We also find that sellers’ affiliation with seller coalitions can increase their sales in a given period. Results show that individual and collective reputation can function well in the absence of mature law and social credit system related to online trade, and that private order can substitute public order in a market with immature laws as in China.