The Effect of Posted Prices on Auction Prices: An Empirical Investigation of a Multi-channel B2B Market

55 Pages Posted: 2 Mar 2021

See all articles by May Truong

May Truong

Erasmus University Rotterdam (EUR)

Alok Gupta

University of Minnesota - Twin Cities - Carlson School of Management

Wolfgang Ketter

Erasmus University Rotterdam (EUR) - Department of Technology and Operations Management; University of Cologne - Institute of Energy Economics; Erasmus Research Institute of Management (ERIM)

E. van Heck

Erasmus University Rotterdam (EUR) - Department of Technology and Operations Management

Date Written: January 7, 2021

Abstract

Multi-channel sales strategies have become common due to the usage of advanced information technologies. Yet, how one trading mechanism can influence the outcome of another, especially in the B2B market, is largely underexplored. This paper investigates the effect of price and quantity information from a pre-sales posted price channel on the performance of the century-old sequential Dutch auctions system. The pre-sales channel is conducted online preceding the auctions. Sellers can control the price and make a proportion of their stock available in the pre-sales. Anything left after the pre-sales is sold via the auctions. Our analysis of nearly 1.5 million flower lots reveals a positive effect where there are higher auction prices and total revenue for lots listed in the pre-sales than for lots that are not. The result holds even for lots with no actual sales in the pre-sales, indicating that buyers pay close attention to the additional information from the pre-sales posted price channel. By teasing out the information effect of pre-sales prices and pre-sales quantity on the auction prices, we evaluate a number of pricing strategies. The results suggest that selling at a high price in the pre-sales is still more beneficial than selling more by discounting prices.

Keywords: Auctions, E-commerce, Information Signal, Multi-channel, Sequential B2B Auctions, Information Revelation, Posted Price

Suggested Citation

Truong, May and Gupta, Alok and Ketter, Wolfgang and Ketter, Wolfgang and van Heck, Eric, The Effect of Posted Prices on Auction Prices: An Empirical Investigation of a Multi-channel B2B Market (January 7, 2021). Available at SSRN: https://ssrn.com/abstract=3761855 or http://dx.doi.org/10.2139/ssrn.3761855

May Truong (Contact Author)

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

Alok Gupta

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

Wolfgang Ketter

University of Cologne - Institute of Energy Economics ( email )

Alte Wagenfabrik
Vogelsanger Strasse 321a
Cologne, 50827
Germany

HOME PAGE: http://ewi.uni-koeln.de/en/

Erasmus University Rotterdam (EUR) - Department of Technology and Operations Management ( email )

RSM Erasmus University
PO Box 1738
3000 DR Rotterdam
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

HOME PAGE: http://www.rsm.nl/energy

Eric Van Heck

Erasmus University Rotterdam (EUR) - Department of Technology and Operations Management ( email )

RSM Erasmus University
PO Box 1738
3000 DR Rotterdam
Netherlands
+31 10 408 2032 (Phone)
+31 10 408 9010 (Fax)

HOME PAGE: http://people.fbk.eur.nl/eheck/personal/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
25
Abstract Views
153
PlumX Metrics