Buy it Now: A Hybrid Internet Market Institution

UC Santa Cruz Economics Working Paper No. 565

27 Pages Posted: 9 May 2004

See all articles by Steven T. Anderson

Steven T. Anderson

Government of the United States of America - International Minerals Section; University of California, Santa Cruz

Daniel Friedman

University of California, Santa Cruz - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Garrett H. Milam

Ryerson University - Economics and Management Science

Nirvikar Singh

University of California, Santa Cruz

Date Written: April 2004

Abstract

This paper analyzes seller choices and outcomes in approximately 700 recent Internet auctions on eBay. The 'Buy it Now' option that is available in these auctions allows the seller to supplement or replace the auction with a posted price offer. We use a structural model to control for the endogenous conduct of the auction (e.g., number of bids and bidders) as well as product and seller characteristics. Among other results, we find that the 'Buy it Now' option was used more often by sellers with higher ratings (awarded by previous buyers) and sellers offering fewer units; and that posted prices were more prevalent for used items. Sellers obtained higher prices for unused and undamaged items overall, and especially when selling at the 'Buy it Now' price.

Suggested Citation

Anderson, Steven Todd and Friedman, Daniel and Milam, Garrett H. and Singh, Nirvikar, Buy it Now: A Hybrid Internet Market Institution (April 2004). UC Santa Cruz Economics Working Paper No. 565, Available at SSRN: https://ssrn.com/abstract=533182 or http://dx.doi.org/10.2139/ssrn.533182

Steven Todd Anderson

Government of the United States of America - International Minerals Section ( email )

991 National Center
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(703) 648-7744 (Phone)
(703) 648-7737 (Fax)

University of California, Santa Cruz ( email )

Economics Department
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United States

Daniel Friedman (Contact Author)

University of California, Santa Cruz - Department of Economics ( email )

Social Sciences I
Santa Cruz, CA 95064
United States
831-459-4981 (Phone)
831-459-5900 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Garrett H. Milam

Ryerson University - Economics and Management Science ( email )

350 Victoria Street
Toronto, Ontario M5B 2K3
Canada

Nirvikar Singh

University of California, Santa Cruz ( email )

Department of Economics
E2 Building
Santa Cruz, CA 95064
United States
831-459-4093 (Phone)
831-459-5077 (Fax)

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