Web Hosting - A Market for Lemons

Posted by David N. Welton Wed, 14 Dec 2005 15:01:00 GMT

I wrote an article, here:

http://www.dedasys.com/articles/webhosting_market_lemons.html

about why I think the market for web hosting is a "market for lemons" - the fact that you can't really tell ahead of time what the quality of service will be like causes it to be a problematic market in some ways, both for service providers and consumers.

It's a work in progress, so ideas, comments and suggestions are welcome!

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Ian Holsman
about 10 hours later:

Hi David. I just stumbled on this article http://www.marginalrevolution.com/marginalrevolution/2005/12/adverse_selecti.html'>Adverse Selection is NOT the problem, that you might find interesting in relations to lemons. Regards Ian
Dave Welton
about 12 hours later:

He says: "One reason adverse selection may not be that important in practice is because buyers and sellers use testing and certification to remove the most important information asymmetries. You can buy a decent used car, for example just get it inspected or certified". I don't think the mechanisms for inspection and certification are mature (or even exist?) in the market for web hosting.
cs
1 day later:

well, you could chose from one of the big boys who've been around for many years (1&1, etc pp)

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