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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.