Searching the Ebay Marketplace
51 Pages Posted: 5 Dec 2006
Date Written: November 2006
Abstract
This paper proposes a framework for demand estimation with data on bids, bidders' identities, and auction covariates from a sequence of eBay auctions. First the aspect of bidding in a marketplace environment is developed. From the simple dynamic auction model with IPV and private bidding costs it follows that if participation is optimal the bidder searches with a reservation bid for low-price auctions. Extending results from the empirical auction literature and employing a similar two-stage procedure as has recently been used when estimating dynamic games it is shown that bidding costs are non-parametrically identified. The procedure is tried on a new data set. The median cost is estimated at less than 2% of transaction prices.
JEL Classification: C23, C51, D44, D82, D83, L10, L81
Suggested Citation: Suggested Citation
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