Online Trading and Adverse Selection in Smartphone Market
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Editura Universitară & ADI Publication
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Information asymmetry that dominates almost all market operations deters market performance and in some markets may lead into non-existence of market due to adverse selection problem. This paper hypothesizes that online trading reduces adverse selection problem in Smartphone market. The findings show that high quality Smart phones sell more than low quality Smart phones. Therefore, trading online induces signaling which reduces the problem of information asymmetry thereby offsetting adverse selection problem.
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Business Economy / Market