Optimal Listing Strategy in Online Auctions

Forthcoming, International Economic Review

40 Pages Posted: 7 Jun 2016 Last revised: 23 Jun 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

Szu-Hsien Ho

National Taiwan University

Chi-Hsiang Liu

Hubei University of Economics

Chien Ming Wang

National Central University at Taiwan - Graduate Institute of Industrial Economics

Date Written: April 6, 2016

Abstract

This paper proposes a unified framework to completely characterize the sellers' optimal listing strategy in the online auction as a function of their rates of time impatience. Specifically, the fixed-price listing, the regular auction, and the buy-it-now auction are each a solution of the seller's single optimization problem under different values of the rate of inter-temporal discount: the perfectly patient seller adopts the regular auction; the sellers with a medium range of time impatience adopt the buy-it-now auction; and the most impatient of sellers adopt the fixed-price listing. Moreover, in the regular and buy-it-now auctions, the optimal reserve price is inversely related to the seller's inter-temporal discount factor, either within or across listing types.

This implies that the optimal reserve price for the buy-it-now auction is greater than that of the regular auction. These predictions offer clear empirical implications.

Keywords: online auction, reserve price, buy-it-now, time impatience, fixed-price sale, listing strategy

JEL Classification: B21, D44, L12, M2

Suggested Citation

Chen, Kong-Pin and Ho, Szu-Hsien and Liu, Chi-Hsiang and Wang, Chien Ming, Optimal Listing Strategy in Online Auctions (April 6, 2016). Forthcoming, International Economic Review. Available at SSRN: https://ssrn.com/abstract=2790831 or http://dx.doi.org/10.2139/ssrn.2790831

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

Szu-Hsien Ho

National Taiwan University ( email )

1 Sec. 4, Roosevelt Road
Taipei 106, 106
Taiwan

Chi-Hsiang Liu

Hubei University of Economics ( email )

Jiang-xia
Wuchang
Wuhan, Hubei 430205
China

Chien Ming Wang

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

Taiwan, Zhongli District
Taiwan

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