Improving the Cyber 'Lemons' Market with a Trust-Intermediary in E-Commerce: Model and Case Study

The efficiency of a market critically depends on the amount and the nature of information-about products-available to sellers and buyers. The electronic marketplace, however, will not be such a blindingly efficient market because of the cyber 'lemons' problem resulting form the asymmetry of information. But, it's a pity that we merely idolize the convenient such as the products customization or personalization from the technology of the Internet and ignore these problems. Based on the lemons principle put forward by American economist George Akerlof, who is one of Nobel economics prize laureates in 2001, the paper analyzes the inherent mechanism in improving the 'lemons' market with a trust-intermediary in e-commerce. For providing empirical evidence, the paper discusses a case from AUCNET (Japan). The paper concludes that the trust-intermediary in e- commerce may play an important role in eliminating the cyber 'lemon'. The trust as the firm specific resource can form and consolidate competitive edge.