Abstract

http://ssrn.com/abstract=2353444
 
 

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Search Costs and Equilibrium Price Dispersion in Auction Markets


Matthew Backus


Cornell University - Department of Economics

Joseph Podwol


Antitrust Division, U.S. Department of Justice

Henry S. Schneider


Cornell University - S.C. Johnson Graduate School of Management

November 1, 2013


Abstract:     
A leading explanation for price dispersion in posted-price markets is search costs. We incorporate this insight into a model of competing second-price auctions similar to eBay. By doing so, we extend the narrow literature on competing auctions to capture price dispersion, and grow the already vast literature on price dispersion to include auctions. We provide evidence for the model using data collected from eBay, identifying search costs by exploiting a discontinuity in the visibility of auctions due to eBay’s search tool.

Published as "Search Costs and Equilibrium Price Dispersion in Auction Markets," European Economic Review 74, 2014, 173-192.

Number of Pages in PDF File: 44


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Date posted: November 23, 2013 ; Last revised: May 1, 2015

Suggested Citation

Backus, Matthew and Podwol, Joseph and Schneider, Henry S., Search Costs and Equilibrium Price Dispersion in Auction Markets (November 1, 2013). Available at SSRN: http://ssrn.com/abstract=2353444 or http://dx.doi.org/10.2139/ssrn.2353444

Contact Information

Matthew Backus
Cornell University - Department of Economics ( email )
414 Uris Hall
Ithaca, NY 14853-7601
United States
Joseph Podwol (Contact Author)
Antitrust Division, U.S. Department of Justice ( email )
202-598-2866 (Phone)
Henry S. Schneider
Cornell University - S.C. Johnson Graduate School of Management ( email )
Ithaca, NY 14853
United States
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