Abstract

  The proliferation of Internet auction elicits many interesting research questions for researchers engaging in this area. This study applies the empirical model to test whether the prices generated from different auction formats in eBay are equivalent. The daily observations in each format from eBay auctions are employed, and the empirical findings give rise to an important implication for internet auctions. The prices generated from different auction formats would be likely to converge except for the combination of the fixed-price listings with the best-offer option and the auction-style listings with the buy-it-now price. Therefore, the sellers’ expected revenues would be equal even they specify their auctions with different formats.   Key words: Internet, price convergence, auction formats, eBay JEL classifications: D44.

Highlights

  • Online auction is very interesting and attractive because varieties of auction formats are offered and conducted sequentially or even in parallel. 1The studies that investigate in the relationship between the auction formats and the seller’s revenue have appeared in large numbers in recent years (Bajari and Hortacsu (2004) and Ockenfels et al (2006) and Hasker and Sickles (2010))

  • In the light of the aforementioned concerns, the purpose of this paper is to empirically examine whether the transaction prices under different auction formats are likely to converge

  • One can find that both hypotheses of H02 and H03 are rejected. This would imply that the prices of different auction formats cannot immediately adjust to the same expected value in one day, even though the price information may be transmitted quickly through internet auction sites

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Summary

Introduction

Online auction is very interesting and attractive because varieties of auction formats are offered and conducted sequentially or even in parallel. 1The studies that investigate in the relationship between the auction formats and the seller’s revenue (or transaction price) have appeared in large numbers in recent years (Bajari and Hortacsu (2004) and Ockenfels et al (2006) and Hasker and Sickles (2010)). These studies are based on cross sectional analysis that could not provide a longterm view between these auction formats. In the previous studies about online auctions, buyout prices in online auctions may be the most interesting mechanism and attract many researchers to investigate. The ending rules in online auctions draw much attention. Roth and Ockenfels (2002), Ariely et al (2005), and Ockenfels and Roth (2006) are the pioneering in this topic, and Tsuchihashi (2012) and Damiano et al (2012) follow the pioneer and go a step further in this issue

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