Sales Mechanisms in Online Markets: What Happened to Internet Auctions?

44 Pages Posted: 4 May 2013 Last revised: 23 Jun 2022

See all articles by Liran Einav

Liran Einav

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Chiara Farronato

Harvard University; National Bureau of Economic Research (NBER)

Jonathan Levin

Stanford Graduate School of Business; Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Neel Sundaresan

eBay Research Labs

Date Written: May 2013

Abstract

Consumer auctions were very popular in the early days of internet commerce, but today online sellers mostly use posted prices. Data from eBay shows that compositional shifts in the items being sold, or the sellers offering these items, cannot account for this evolution. Instead, the returns to sellers using auctions have diminished. We develop a model to distinguish two hypotheses: a shift in buyer demand away from auctions, and general narrowing of seller margins that favors posted prices. Our estimates suggest that the former is more important. We also provide evidence on where auctions still are used, and on why some sellers may continue to use both auctions and posted prices.

Suggested Citation

Einav, Liran and Farronato, Chiara and Levin, Jonathan D. and Sundaresan, Neel, Sales Mechanisms in Online Markets: What Happened to Internet Auctions? (May 2013). NBER Working Paper No. w19021, Available at SSRN: https://ssrn.com/abstract=2260659

Liran Einav (Contact Author)

Stanford University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Chiara Farronato

Harvard University ( email )

1875 Cambridge Street
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National Bureau of Economic Research (NBER) ( email )

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Jonathan D. Levin

Stanford Graduate School of Business ( email )

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Stanford, CA 94305-5015
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Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Neel Sundaresan

eBay Research Labs ( email )

2065 Hamilton Avenue
San Jose, CA
United States

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