What Drives Fraud in a Credence Goods Market? – Evidence from a Field Study | Zendy

Rasch Alexander | Zendy; Waibel Christian | Zendy

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What Drives Fraud in a Credence Goods Market? – Evidence from a Field Study

Author(s) -

Rasch Alexander,

Waibel Christian

Publication year - 2018

Publication title -

oxford bulletin of economics and statistics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 1.131

H-Index - 73

eISSN - 1468-0084

pISSN - 0305-9049

DOI - 10.1111/obes.12204

Subject(s) - credence good , incentive , business , credence , german , competition (biology) , industrial organization , competence (human resources) , monetary economics , economics , finance , microeconomics , information asymmetry , ecology , statistics , management , archaeology , biology , history , mathematics

This paper investigates the impact of competition on an expert firm's incentive to defraud its customers in a credence goods market. Controlling for the competence of car repair shops, their financial situation, and reputational concerns, we use and complement the data set from a nationwide field study conducted by the German Automobile Association that regularly checks the reliability of garages in Germany. We find that more intense competition lowers a firm's incentive to defraud its customers.

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