The Transaction Cost Economics of Market-based Exchange: The Impact of Reputation and External Verification Agencies

In this analysis, we empirically investigate market-based transaction costs. We measure market-based transaction costs indirectly by examining variations in market prices when selling Morgan Silver Dollars on eBay. We find that the reputation of both the seller and the coin-rating agency employed significantly influences the price premium obtained. Moreover, we find that the use of a coin-rating agency with a poor reputation proved more damaging than the use of no coin-rating agency. Thus, we find support for the suggestion that the reputation of sellers and third-party verification agencies have a significant influence on perceived market-based transaction costs.