Seller Search and Market Outcomes in Online Auctions
36 Pages Posted: 17 Sep 2008 Last revised: 9 Jun 2010
Date Written: May 1, 2010
It has become widely accepted that information technology (IT) has had a profound influence on market transactions, with lower search costs for buyers often considered the key to lower prices and higher consumer welfare. However, sellers also use online channels to search for buyers whose product preferences and valua-tions match the sellers’ offerings, and limited research has examined the impact of IT on sellers’ search strat-egies or associated market outcomes. In this study, we investigate how market characteristics, the length of time the seller searches the auction marketplace for a buyer, and seller search in other websites influence the final sale price in online auctions. The online auction market for used vehicles provides a valuable oppor-tunity to observe search processes of sellers, as the unique VIN associated with each vehicle enables the tracking of an individual item across both subsequent auctions and across other websites. We find that the market characteristics, duration of search, and search in other websites are each associated with a higher final sale price. Our findings highlight the importance of examining both buyer and seller search behaviors to fur-ther our understanding of the impacts of IT on market outcomes and efficiency.
Keywords: seller search, online auctions, sequential auctions, online channels
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