The Role of Online Platforms for Media Markets – Two‐Dimensional Spatial Competition in a Two‐Sided Market

We analyze the market for online and offline media in a model of two-dimensional spatial competition where media outlets sell content and advertising space. Consumer preferences are distributed along the style and type of news coverage where the distance costs may vary across dimensions. For integrated provision of online and offline platforms we show that entering the online market reduces average profits and may even constitute a prisoner's dilemma. Specialized provision may yield polarization in the style and type dimensions. This is in contrast to the maximum–minimum differentiation result previously established in the literature on multidimensional horizontal competition. We show that maximal differentiation in both dimensions occurs due to the discrete nature of the type dimension and asymmetric advertising markets.

Consumer Behavior in Moral Markets. On the Relevance of Identity, Justice Beliefs, Social Norms, Status and Trust in Ethical Consumption

This article addresses ethical consumer behavior and uses the purchase of Fair Trade (FT) coffee to gain insights into determinants of ‘moral behavior’ in the marketplace. Our primary concern is to clarify which theoretical concepts and determinants are more useful than others in explaining FT consumption. We compare the explanatory power of consumer budget restrictions, consumer identity, social and personal norms, social status, justice beliefs, and trust. Our second aim is methodological; we contrast data on self-reported consumption of FT coffee with experimental data on hypothetical choices of different coffee products. To gain insights into the robustness of our measurement and findings, we test our propositions using two samples of undergraduate students from Germany and the United States. Our data show that consumer identity and personal norms are the major determinants of FT consumption in both samples, the results from survey-based data and from our experimental data are similar in this regard. Further, we demonstrate that studies based on a limited number of determinants might overestimate effects; the effect of justice beliefs for instance vanishes if other determinants are taken into account.

Reputation Formation and the Evolution of Cooperation in Anonymous Online Markets

Theoretical propositions stressing the importance of trust, reciprocity, and reputation for cooperation in social exchange relations are deeply rooted in classical sociological thought. Today’s online markets provide a unique opportunity to test these theories using unobtrusive data. Our study investigates the mechanisms promoting cooperation in an online-auction market where most transactions can be conceived as one-time-only exchanges. We first give a systematic account of the theoretical arguments explaining the process of cooperative transactions. Then, using a large dataset comprising 14,627 mobile phone auctions and 339,517 DVD auctions, we test key hypotheses about the effects of traders’ reputations on auction outcomes and traders’ motives for leaving feedback. Our statistical analyses show that sellers with better reputations have higher sales and obtain higher prices. Furthermore, we observe a high rate of participation in the feedback system, which is largely consistent with strong reciprocity—a predisposition to unconditionally reward (or punish) one’s interaction partner’s cooperation (or defection)—and altruism—a predisposition to increase one’s own utility by elevating an interaction partner’s utility. Our study demonstrates how strong reciprocity and altruism can mitigate the free-rider problem in the feedback system to create reputational incentives for mutually beneficial online trade.