Ask Prices, Offers, and Time to Sale in an Online Exchange

15 Pages Posted: 5 Jun 2006

See all articles by Amy Farmer

Amy Farmer

University of Arkansas - Department of Economics

Victor Stango

UC Davis Graduate School of Management

Abstract

By examining an online computer exchange, we find that sellers who place higher nonbinding ask prices have higher outstanding offers and remain on the exchange longer, suggesting a willingness to hold out for higher offers. Additionally, higher ask prices deter buyers from making offers. The results are stronger in thinner market segments, suggesting that gains from waiting for a high price are greater when buyers` tastes are idiosyncratic. These relationships are consistent with models in which buyers engage in costly search and suggest that online exchanges may not eliminate the frictions related to bilateral transactions. (JEL D8, L0, L1)

Suggested Citation

Farmer, Amy and Stango, Victor, Ask Prices, Offers, and Time to Sale in an Online Exchange. Economic Inquiry, Vol. 42, Issue 1, pp. 14-28, 2004, Available at SSRN: https://ssrn.com/abstract=906203

Amy Farmer (Contact Author)

University of Arkansas - Department of Economics ( email )

Fayetteville, AR 72701
United States
501-575-6093 (Phone)
501-575-3241 (Fax)

Victor Stango

UC Davis Graduate School of Management ( email )

One Shields Avenue
Davis, CA 95616
United States

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