Bargaining Versus Posted-Price: Evidence from eBay Motors

33 Pages Posted: 6 Apr 2016

See all articles by Kong-Pin Chen

Kong-Pin Chen

Academia Sinica - Research Center for Humanities and Social Sciences; National Taiwan University - Department of Economics

Yong Han

Xi'an Jiaotong University (XJTU) - Jinhe Center for Economic Research

Chia-Ching Lin

National Central University at Taiwan - Graduate Institute of Industrial Economics

Ya-Ting Yu

Graduate Institute of Industrial Economics

Date Written: March 31, 2016

Abstract

This paper empirically compares between bargaining and posted price by using data of the fixed-price and the Best Offer listings in eBay Motors. We first show that, consistent with the view that bargaining incurs higher cost than price posting, the sellers who list more items are more likely to adopt the fixed-price format. We then show that Best Offer results in a higher sale rate than the fixed-price format but, if the item is sold, there's no significant difference in transaction price. Given that the seller usually posts a higher buy-it-now price in Best Offer, this can be explained either by the anchoring effect or the sunk-cost fallacy. Moreover, by identifying a variable as the proxy for the seller's bargaining power, we show that the greater bargaining power the seller has, the more likely she is to adopt the fixed-price listing. This result, though counter-intuitive, is consistent with the theoretical prediction in Bester (1993).

Keywords: eBay, bargaining, Best Offer, online auction, posted price, listing strategy

JEL Classification: D44, L86

Suggested Citation

Chen, Kong-Pin and Han, Yong and Lin, Chia-Ching and Yu, Ya-Ting, Bargaining Versus Posted-Price: Evidence from eBay Motors (March 31, 2016). Available at SSRN: https://ssrn.com/abstract=2758262 or http://dx.doi.org/10.2139/ssrn.2758262

Kong-Pin Chen (Contact Author)

Academia Sinica - Research Center for Humanities and Social Sciences ( email )

RCHSS
Academia Sinica
Nankang, Taipei, 11529
Taiwan
886 2 2789 8160 (Phone)
886 2 2785 4160 (Fax)

HOME PAGE: http://idv.sinica.edu.tw/kongpin/

National Taiwan University - Department of Economics

21 Hsiu Chow Rd
Taipei, 10020
Taiwan

Yong Han

Xi'an Jiaotong University (XJTU) - Jinhe Center for Economic Research ( email )

China

Chia-Ching Lin

National Central University at Taiwan - Graduate Institute of Industrial Economics ( email )

Taiwan, Zhongli District
Taiwan

Ya-Ting Yu

Graduate Institute of Industrial Economics ( email )

No. 300, Zhongda Road
Chung-Li Taiwan, 32054
Taiwan

Register to save articles to
your library

Register

Paper statistics

Downloads
92
Abstract Views
656
rank
279,641
PlumX Metrics