Trust and online markets

Online markets offer a host of benefits for consumers through innovative and low-cost products. However, online markets can only fulfil their potential if they benefit from consumer trust. Where product information is hard to obtain and assess, markets may not respond to consumer needs. Consumers may be forced to rely on imprecise indicators of quality—such as brand names—to establish trust. This, in turn, limits firms’ incentives to improve their offering and deters new entrants. In other cases, consumers may be deterred from using online markets altogether. Establishing an environment of trust in online markets requires multidisciplinary (and often cross-border) approaches from authorities charged with ensuring fair competition, consumer protection, and data protection, as well as other regulators. This chapter considers the benefits and risks associated with online markets from the perspective of trust.