Is there a market for trusted car data?

  • Ingrid BauerEmail author
  • Liudmila Zavolokina
  • Gerhard Schwabe
Research Paper
Part of the following topical collections:
  1. Potential and Limits of Blockchain Technology for Networked Businesses


The used-car trade is characterized by information asymmetries between buyers and sellers leading to uncertainty and distrust, thus causing market inefficiencies. Prior research has shown that blockchain offers a solution: a transparent, trustworthy and verified car history that addresses these issues in the market for ‘lemons’. Yet, whether or not there really is a market for trusted car data remains an open question. In particular, it is unclear if trusted car data increases transparency in the market for lemons and how market participants value increased transparency. Hence, through a market game with 50 participants, we explored the effects of trusted car data on the sales price of the cars, and the relative revenue of buyers and sellers. Additionally, we conducted interviews with the participants to elicit the perceived customer value. The results show that blockchain enables an increase in transparency and creates value for both buyers and sellers.


Blockchain Market for lemons Value creation Data and information products Data-driven business models 

JEL classification

O33 O39 D82 


Supplementary material

12525_2019_368_MOESM1_ESM.docx (25 kb)
ESM 1 (DOCX 25.3 kb)


  1. Akerlof, G. A. (1970). The market for ‘lemons’: Quality uncertainty and the market mechanism. The Quarterly Journal of Economics, 84, 488–500.CrossRefGoogle Scholar
  2. Akerlof, G. (1976). The economics of caste and of the rat race and other woeful Tales. The Quarterly Journal of Economics, 90(4), 599. Scholar
  3. Avital, M., Beck, R., King, J., Rossi, M., & Teigland, R. (2016). Jumping on the Blockchain bandwagon: Lessons of the past and outlook to the future. 37th ICIS Proceedings.Google Scholar
  4. Bauer, I., Zavolokina, L., Leisibach, F., & Schwabe, G. (2018). Exploring Blockchain value creation: The case of the Car ecosystem. Proceedings of the 52th HICSS, 10.Google Scholar
  5. Beck, R., Weber, S., & Gregory, R. W. (2013). Theory-generating design science research. Information Systems Frontiers, 15(4), 637–651. Scholar
  6. Beck, R., Czepluch Stemi, J., Lollike, N., & Malone, S. (2016). Blockchain - the gateway to trust-free cryptographic transactions (1–14). Turkey: Istanbul.Google Scholar
  7. Bergander. (2017, June 9). Carpass: Autohistorie nach Carfax-Vorbild - Die Gebrauchtwagen Historie geht online. Retrieved November 13, 2018, from Accessed 13 Nov 2018.
  8. Böhme, R., Christin, N., Edelman, B., & Moore, T. (2015). Bitcoin: Economics, technology, and governance. Journal of Economic Perspectives, 29(2), 213–238. Scholar
  9. Bond, E. W. (1982). A direct test of the “lemons” model: The market for used pickup trucks. The American Economic Review, 72(4), 836–840.Google Scholar
  10. Briggs, R. O., & Schwabe, G. (2011). On expanding the scope of design science in IS research. In H. Jain, A. P. Sinha, & P. Vitharana (Eds.), Service-Oriented Perspectives in Design Science Research (Vol. 6629, pp. 92–106).
  11. Brousmiche, K. L., Heno, T., Poulain, C., Dalmieres, A., & Ben Hamida, E. (2018). Digitizing, securing and sharing vehicles life-cycle over a consortium Blockchain: Lessons learned. 2018 9th IFIP international conference on new technologies, mobility and security (NTMS), 1–5.
  12. Chen, Y., Li, Q., & Wang, H. (2018). Towards trusted social networks with Blockchain. Presented at the Symposium on Foundations and Applications of Blockchain. Retrieved from ( Accessed 26 March 2019.
  13. Dimoka, A., & Pavlou, P. (2006). Product Quality Uncertainty in Online Auction Marketplaces: Overcoming Adverse Product Selection with Price Premiums. 6.Google Scholar
  14. Dimoka, A., Hong, Y., & Pavlou, P. A. (2012). On Product Uncertainty in Online Markets: Theory and Evidence. 36(2), 395–426.Google Scholar
  15. European Comission - Justice and Consumers. (2014, October 1). Study on the second hand cars market. Retrieved October 20, 2017, from Accessed 16 Nov 2018.
  16. European Parliament. (2018, May 29). Fighting mileage fraud on used cars. Retrieved from News European Parliament website: Accessed 16 Nov 2018.
  17. Genesove, D. (1993). Adverse selection in the wholesale used Car market. Journal of Political Economy, 101(4), 644–665. Scholar
  18. Gipp, B., Meuschke, N., & Gernandt, A. (2015). Decentralized Trusted Timestamping using the Crypto Currency Bitcoin. 6.Google Scholar
  19. Glaser, F. (2017). Pervasive Decentralisation of Digital Infrastructures: A Framework for Blockchain enabled System and Use Case Analysis. Presented at the proceedings of the 50th Hawaii international conference on system sciences |. Retrieved from Accessed 12 Nov 2018.
  20. Granados, N. F., Gupta, A., & Kauffman, R. (2006). The impact of IT on market information and transparency: A unified theoretical framework. Journal of the Association for Information Systems, 7(3), 148–178. Doi:
  21. Hawlitschek, F., Notheisen, B., & Teubner, T. (2018). The limits of trust-free systems: A literature review on blockchain technology and trust in the sharing economy. Electronic Commerce Research and Applications, 29, 50–63. Scholar
  22. Hevner, A. R. (2007). A three cycle view of design science research. Scandinavian Journal of Information Systems, 19(2), 7.Google Scholar
  23. Hevner, A. R., March, S. T., Park, J., & Ram, S. (2004). Design science in information systems research. MIS Quarterly, No., 1(28), 75–105.CrossRefGoogle Scholar
  24. Höst, M., Regnell, B., & Wholin, C. (2000). Using students as subjects - a comparative study of students and professionals in Lead-time impact assessment. Empirical Software Engineering: An International Journal, 5(3), 201–214.CrossRefGoogle Scholar
  25. Huston, J. H., & Spencer, R. W. (2002). Quality, uncertainty and the internet: The market for cyber lemons. The American Economist, 46(1), 50–60. Scholar
  26. Lades, S. (2017, March 15). Vertrauen der Deutschen in Sicherheitskräfte wächst weiter - Automobilbranche mit starken Verlusten. Retrieved from GFK Verein website: S. Lades, “Vertrauen der Deutschen in Sicherheitskräfte wächst weiter - Automobilbranche mit starken Verlusten,Google Scholar
  27. Levin, J. (2001). Information and the market for lemons. The Rand Journal of Economics, 32(4), 657. Scholar
  28. Lewis, G. (2011). Asymmetric information, adverse selection and online disclosure: The case of eBay motors. The American Economic Review, 101(4), 1535–1546.CrossRefGoogle Scholar
  29. Liang, X., Shetty, S., Tosh, D., Kamhoua, C., Kwiat, K., & Njilla, L. (2017, May). ProvChain: A Blockchain-Based Data Provenance Architecture in Cloud Environment with Enhanced Privacy and Availability. 468–477. doi:
  30. Malone, T. W., Yates, J., & Benjamin, R. I. (1987). Electronic markets and electronic hierarchies. Communications of the ACM, 30(6), 484–497.CrossRefGoogle Scholar
  31. March, S. T., & Smith, G. F. (1995). Design and natural science reserach on inforamtion technology. Secision Support Systems, 15, 251–266.CrossRefGoogle Scholar
  32. Myers, M. D., & Newman, M. (2007). The qualitative interview in IS research: Examining the craft. Information and Organization, 17(1), 2–26. Scholar
  33. Naerland, K., Müller-Bloch, C., Beck, R., & Palmund, S. (2017). Blockchain to Rule the Waves - Nascent Design Principles for Reducing Risk and Uncertainty in Decentralized Environments. 16. South Korea.Google Scholar
  34. Nakamoto, S. (2009). Bitcoin: A Peer-to-Peer Electronic Cash System., 9.Google Scholar
  35. Notheisen, B., Cholewa, J. B., & Shanmugam, A. P. (2017a). Trading real-world assets on Blockchain: An application of trust-free transaction Systems in the Market for lemons. Business & Information Systems Engineering, 59(6), 425–440. Scholar
  36. Notheisen, B., Hawlitschek, F., & Weinhardt, C. (2017b). Breaking down the Blockchain hype - Towrads a blockchain market engineering approach. In Proceedings of the 25th European Conference on Information Systems (ECIS), 20. Guimarães, Portugal.Google Scholar
  37. Pavlou, P., & Dimoka, A. (2008). Understanding and mitigating product uncertainty in online auction marketplaces. Information Systems Research. doi:
  38. Peffers, K., Tuunanen, T., Rothenberger, M., & Chatterjee, S. (2007). A Design Science Research Methodology for Information Systems Research. J Manage Inf Syst 24(3), 45–77.
  39. Peterson, J. R., & Schneider, H. S. (2014). Adverse selection in the used-car market: Evidence from purchase and repair patterns in the consumer expenditure survey. The Rand Journal of Economics, 45(1), 140–154. Scholar
  40. Risius, M., & Spohrer, K. (2017). A Blockchain research framework: What we (don’t) know, where we go from Here, and how we will get there. Business & Information Systems Engineering, 59(6), 385–409. Scholar
  41. Saldaña, J. (2009). The coding manual for qualitative researchers. Los Angeles, Calif: Sage.Google Scholar
  42. Seebacher, S., & Schüritz, R. (2017). Blockchain technology as an enabler of service systems: A structured literature review. In S. Za, M. Drăgoicea, & M. Cavallari (Eds.), Exploring Services Science (Vol. 279, pp. 12–23). doi:
  43. Shrier, D., Wu, W., & Pentland, A. (2016). Blockchain & Infrastructure (identity, data security). Computer Science & Engineering, MIT, 3, 18.Google Scholar
  44. Stahl, K., & Strausz, R. (2017). Certification and market transparency. Review of Economic Studies, 84, 1842–1868. Scholar
  45. Stebbins, R. (2001). Exploratory research in the social sciences. In Thousand oaks, CA; London, UK. New Delhi, India: Sage Publications, Inc..Google Scholar
  46. The promise of the blockcahin trust machine. (2015). The Economist. Retrieved from
  47. Weber, R. P. (1990). Basic content analysis. Sage.Google Scholar
  48. Wilson, C. (1980). The nature of equilibrium in markets with adverse selection. The Bell Journal of Economics, 11(1), 108. Scholar
  49. Wolinsky, A. (1983). Prices as signals of product quality. The Review of Economic Studies, 50(4), 647. Scholar
  50. Zavolokina, L., Miscione, G., & Schwabe, G. (2018a). Buyers of lemons: Addressing buyers’ needs in the market for lemons with Blockchain technology. 52nd Hawaii international conference on system sciences, 10.Google Scholar
  51. Zavolokina, L., Spychiger, F., Tessone, C., & Schwabe, G. (2018b). Incentivizing Data Quality in Blockchains for Inter-Organizational Networks – Learning from the Digital Car Dossier. Presented at the international conference of information systems (ICIS).Google Scholar
  52. Ziolkowski, R., Miscione, G., & Schwabe, G. (2018). Consensus through Blockchains: Exploring governance across inter- organizational settings. 39th ICIS Proceedings, 17.Google Scholar

Copyright information

© Institute of Applied Informatics at University of Leipzig 2019

Authors and Affiliations

  1. 1.Department of Informatics, Information Management Research GroupUniversity of ZurichZurichSwitzerland

Personalised recommendations