City Research Online

Abstract

This thesis investigates the mechanisms addressing information asymmetry in the digital economy, focusing on the interactions between policy, technology, and market behavior in the online used car market. It comprises three essays that integrate theoretical synthesis with empirical identification to explore how trust is constructed in digital marketplaces.

The first essay reviews the literature on signaling, disclosure, and certification, establishing a theoretical framework for understanding how digital platforms reshape traditional solutions to adverse selection. It highlights the pivotal role of platform governance in facilitating credible information exchange. The second essay employs a difference-in-differences strategy to analyze the market response to Volkswagen’s court-mandated Zero Emission Vehicle (ZEV) investment plan. The results indicate a significant 13.5% increase in the final auction prices of Volkswagen used cars following the announcement, with no corresponding change in transaction volume. This finding suggests that non-voluntary CSR initiatives can effectively enhance consumer perceived quality and willingness to pay. The third essay investigates the impact of buyer information acquisition through eBay’s WeGoLook inspection service. The analysis reveals that the introduction of the service increased final prices by approximately 12% and reduced the marginal value of seller-provided photos. Furthermore, the policy induced a strategic supply-side response, where sellers increased voluntary disclosure to mitigate the threat of third-party verification.

This body of research contributes to information economics and platform design by demonstrating that credible signals, ranging from institutional mandates to technological enablers, are indispensable for mitigating moral hazard and enhancing market efficiency in the digital age.

Publication Type:	Thesis (Doctoral)
Subjects:	H Social Sciences > HB Economic Theory
Departments:	School of Policy & Global Affairs > Department of Economics School of Policy & Global Affairs > School of Policy & Global Affairs Doctoral Theses Doctoral Theses

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