The Seller's Listing Strategy in Online Auctions: Evidence from Ebay
Academia Sinica - Research Center for Humanities and Social Sciences; National Taiwan University - Department of Economics
Research Center for Humanities and Social Sciences
Graduate Institute of Industrial Economics
January 16, 2012
The paper empirically studies why the sellers of identical commodities adopt different auction formats in the online auction, and the consequences thereof. We postulate that the sellers adopt different auction formats because of the differences in their experience and the number of items they have. We first use these two characteristics to endogeneize the seller's choice between three auction formats: fixed-price, buy-it-now (BIN), and pure auctions. We then estimate the differences in sales rate, transaction price, and sale duration between the three formats. We find that the fixed-price auction results in the highest transaction price and the lowest sale rate, while the pure auction is just the opposite, with the BIN auction falling in between. These results strongly suggest that there is a tradeoff between price and sale probability in adopting different formats of auctions.
Number of Pages in PDF File: 28
Keywords: online auctions, eBay, fixed-price sale, buy-it-now, second-price auction, reputation, experience, selling format
JEL Classification: D44
Date posted: February 14, 2012 ; Last revised: May 13, 2012
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