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Factors Affecting Price Setting in Online Auctions

Journal of Revenue and Pricing Management (2012) 11, 289-302

University of Alberta School of Business Research Paper No. 2013-1114

32 Pages Posted: 26 Feb 2012 Last revised: 25 Jul 2013

Chun Qiu

McGill University - Desautels Faculty of Management

Peter T. L. Popkowski Leszczyc

University of Alberta - Department of Marketing, Business Economics & Law

Yongfu He

Monash University

Date Written: June 1, 2011

Abstract

This paper provides research into the effects of product class and seller reputation on price-setting in online auctions. Sellers may offer price information to potential bidders through buy-now prices (BNPs) and starting prices (SPs). In two experiments, the authors show that for products with values that are difficult to assess, such price information affects bidders’ perception and willingness to pay (WTP), and as such are subject to the moderating effects of product class and seller reputation. In addition, the authors model sellers’ decision-making in setting the SP and BNP as a two-stage process, using data collected from eBay auctions. In the first stage, sellers decide whether to set a BNP. In stage two, they decide on the level of the SP. Results show that sellers are more likely to set a BNP when they are more reputable and when the product is a high-end one. The proposed model provides guidelines for marketing and auction practitioners in setting prices.

Keywords: Online auctions, pricing, buy-now price, starting price

JEL Classification: C91, C99, D44, M31, M39

Suggested Citation

Qiu, Chun and Popkowski Leszczyc, Peter T. L. and He, Yongfu, Factors Affecting Price Setting in Online Auctions (June 1, 2011). Journal of Revenue and Pricing Management (2012) 11, 289-302; University of Alberta School of Business Research Paper No. 2013-1114. Available at SSRN: https://ssrn.com/abstract=2011084

Chun Qiu

McGill University - Desautels Faculty of Management ( email )

1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
Canada

Peter T. L. Popkowski Leszczyc (Contact Author)

University of Alberta - Department of Marketing, Business Economics & Law ( email )

Edmonton, Alberta T6G 2R6
Canada
780-492-1866 (Phone)
780-492-3325 (Fax)

HOME PAGE: http://www.bus.ualberta.ca/ppopkowski/

Yongfu He

Monash University ( email )

Sir John Monash Road
Caulfield East, Victoria 3163
Australia

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