Buy-Price Options at Online Auctions in the Presence of Competing Posted-Price Markets

58 Pages Posted: 4 Jan 2005

See all articles by Ho-mu Lee

Ho-mu Lee

KAIST Graduate School of Management

Byong-Hun Ahn

Korea Advanced Institute of Science and Technology (KAIST) - Graduate School of Management

Date Written: January 31, 2004

Abstract

Various buy-price options occupy a significant portion of transactions in major online auction sites, although their posted-price attribute seems to run counter to the virtue of the auction mechanism. To investigate their influence on the behavior of bidders and sellers, we examine auctions at Yahoo! and eBay in the presence of competing posted-price markets. The analysis of the equilibrium strategies of auction participants reveals some intriguing points including the fact that totally ineffective posted-price markets make buy-price options unnecessary to sellers. Additionally, the durations and the expected revenue of auctions are compared to illuminate sellers' motivation to adopt buy-price options.

Keywords: Buy-It-Now, Buy-price, online auctions, posted-price selling

JEL Classification: D44

Suggested Citation

Lee, Ho-mu and Ahn, Byong-Hun, Buy-Price Options at Online Auctions in the Presence of Competing Posted-Price Markets (January 31, 2004). Available at SSRN: https://ssrn.com/abstract=639881 or http://dx.doi.org/10.2139/ssrn.639881

Ho-mu Lee (Contact Author)

KAIST Graduate School of Management ( email )

207-43 Cheongryangri-Dong
Dongdaemun-Ku
Seoul, 130-722
Korea
+82-19-366-4096 (Phone)
+82-2-958-3649 (Fax)

Byong-Hun Ahn

Korea Advanced Institute of Science and Technology (KAIST) - Graduate School of Management ( email )

207-43 Chongnyangni-dong
Dongdaemoon-gu
Seoul, 130-722
Korea
822-958-3633 (Phone)
822-958-3649 (Fax)

HOME PAGE: http://www.kaistgsm.ac.kr/english/

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