Number Of Sellers Research Articles

A note on fairness and personalised pricing

Since the seminal papers of Fehr and Schmidt (1999) and Bolton and Ockenfels (2000), fairness has become an important discussion point in economics. Is it unfair that different people pay different prices for the same good or service? We provide what we believe to be a novel approach: We let normal everyday consumers play the role of sellers who have access to consumers’ data (and willingness to pay). A strong finding of behaviour in this setup is that subjects charge a fixed percentage (approximately 64%) of the willingness to pay from each of their subjects, leading to a fair, whilst uneven, distribution of prices. Interesting, this 64% price level does not change when we vary the number of sellers competing in the market.

Seller Diversity on a Two-Sided Platform

The growth of online marketplaces is accompanied by significant heterogeneity of the third-party sellers. The marketplace owner often applies policies that favor the sellers who offer higher values to buyers, which puts the lower-value sellers at an even greater disadvantage. This leads to the phenomenon of Matthew Effect. Our study focuses on a marketplace owner’s policy in managing seller heterogeneity and analyzes Matthew Effect in a competitive market environment. By extending the circular city model, we analytically examine the price competition among a large number of sellers that differ both in variety and in their value offerings. We present the closed-form equilibrium solution for the sellers’ pricing strategies, which illustrates the ripple effect that exerts competitive pressure from seller to seller at a diminishing magnitude. Furthermore, we show that, by providing each seller with the support that enhances its value offering proportionally, the marketplace owner further sharpens seller heterogeneity and creates Matthew Effect. This results in an increased profit for the marketplace owner and improved consumer surplus. The optimal level of such value-based support is dependent on the distribution of the sellers’ values and the buyers’ horizontal preferences. Our findings suggest that Matthew Effect improves social welfare by increasing the total profits of sellers and the marketplace owner, as well as the consumer surplus; moreover, it creates business opportunities for new sellers in the online marketplace.

Quantifying Cross-Network Effects in Online C2C Platforms

Consumer-to-Consumer (C2C) platforms have become a major engine of growth in Internet commerce. This is especially true in countries such as China, which are experiencing a big rush towards electronic commerce. The emergence of such platforms gives researchers the unique opportunity to investigate the evolution of such platforms by focusing on the growth of both buyers and sellers. In this research, we build a utility-based model to quantify both cross and direct network effects on Alibaba Group’s Taobao.com, the world’s largest online C2C platform (based in China). Specifically, we investigate the relative contributions of different factors that affect the growth of buyers and sellers on the platform. Our results suggest that the direct network effects do not play a big role in the platform’s growth (we detect a small positive direct network effect on buyer growth and no direct network effect on seller growth). More importantly, we find a significant, large and positive cross-network effect on both sides of the platform. In other words, the installed base of either side of the platform has propelled the growth of the other side (and thus the overall growth). Interestingly, this cross-network effect is asymmetric with the installed base of sellers having a much larger effect on the growth of buyers than vice versa. The growth in the number of buyers is driven primarily by the seller’s installed base and product variety with increasing importance of product variety. The growth in the number of sellers is driven by buyer’s installed base, buyer quality, and product price with increasing importance of buyer quality. We also investigate the nature of these cross-network effects over time. We find that the cross-network effect of sellers on buyers increases and then decreases to reach a stable level. In contrast, the cross-network effect of buyers on sellers is relatively stable. We discuss the policy implications of these findings for C2C platforms in general and Taobao in particular.

Bitcoin

This paper considers whether the stability of Bitcoin in the market as a method of payment using a dual currency money-search model. In the model, there is traditional money and Bitcoin. The two currencies are classified by the storage cost and the probability that sellers accept particular money for payments. Agents are randomly matched for transactions. To consider substitution effect between monies, we allow new entries every period. In the beginning of each period, new entrants come into the matching process with a unit of money of their choice. A certain number of sellers also come into the same process to maintain the population share of sellers at a constant level. With appropriately chosen parameters, the author finds that there can be stable and unstable equilibria of the share of bitcoiners. In this case, a stable equilibrium is a success (bitcoiners take a large share) while the other (unstable) is a failure (bitcoiners take a marginal share or vanish). However, if the inflation rate of traditional money decreases, the successful equilibrium disappears to start approaching the failure even if Bitcoin is currently widely accepted. Furthermore, welfare comparisons suggest that an increase in the share of bitcoiners has a negative effect; hence, the benefit from reductions in the transaction costs must compensate for the welfare erosion if Bitcoin is accepted as a new kind of payment system. If the author is to succeed, the Bitcoin community or the public authorities need to be prepared for protecting the system from several illicit activities.

Assessing the Impact of Gasoline Sales-Below-Cost Laws on Retail Price and Market Structure: Implications for Consumer Welfare

The effectiveness of gasoline-specific sales-below-cost (SBC) laws designed to limit firms' predatory behavior is yet to be determined. To provide policy makers with conceptual and empirical insights into this issue, the authors propose and empirically test a simultaneous equations model grounded in the structure–conduct–performance framework that assesses the direct and indirect impacts that SBC laws have on market structure (number of sellers) and on the wholesale and retail prices of gasoline. Unlike other SBC studies, which are more cross-sectional in nature and focus on a limited number of areas, the authors use monthly gasoline wholesale and retail prices from 1983 to 2010 for all 50 states. This approach is advantageous because it includes the opportunity to assess the long-term impact of SBC laws and transitional effects as states enact or repeal SBC legislation. The results suggest that SBC laws reduce retail prices directly and indirectly by increasing the number of sellers, thus improving customer welfare.

Effects of competition on environmental water buyback auctions

As water extractions from the world's rivers have grown, flows available for the environment have dwindled. In many parts of the world governments are now considering strategies to restore environmental flows. One strategy is for a government to buyback water from irrigators for the environment with annual lease arrangements. In this paper we have studied the role of market competition (in terms of environmental water demand and number of sellers) in determining the performance of multi-round environmental water buyback auctions using a stylized agent based simulation model. The results suggest that rent extraction lowers as the number of bidders increase and water demand decreases. However, we find significant differences in the way changes in demand and supply influence rent extraction. Reduction in water demand has much greater impact on rent extraction than increasing the number of bidders in the market. Further, in wet years (when supply is abundant relative to demand) bidders engage in more competitive bidding compared to cases in dry years. Results from the analysis indicate that government agencies benefit more from arranging buyback tenders (1) with a small target relative to tenders with a large bidder population and (2) with greater opportunities for the bidders to learn from the market in wet years compared to dry years.

When Do Large Buyers Pay Less? Experimental Evidence

The rise of mega‐retailers has precipitated a growing literature on large‐buyer discounts. According to Rotemberg and Saloner [1986] and Snyder [1998], large buyers' ability to obtain price discounts depends on their relative size and the degree of seller competition. I test experimentally implications of this theory concerning the number of sellers and the sizes of buyers in the market. The results track the comparative‐statics predictions to a surprising extent. Subtle changes in the buyer‐size distribution or number of sellers can create or negate large‐buyer discounts. The results highlight the previously unexplored role of the demand structure in determining buyer‐size discounts.

Buyer behavior adaptation based on a fuzzy logic controller and prediction techniques

The current form of Web provides numerous product resources available to users. Users can rely on intelligent agents for purchase actions. These actions are taken in specific environments such as Electronic Markets (EMs). In this paper, we study the interaction process between buyers and sellers and focus on the buyer side. Each buyer has the opportunity to interact with a number of sellers trying to buy the most appropriate products. This interaction can be modeled as a finite horizon Bargaining Game (BG). In this game, players have opposite goals concerning the product price. We adopt a number of techniques in the buyer side trying to give the appropriate level of efficiency in the buyer decision process. The buyer uses a prediction mechanism in combination with the use of Fuzzy Logic (FL) theory in order to be able to predict the upcoming seller proposal and, thus, understand the seller pricing policy. Based on this, he/she can adapt his/her behavior when trying to purchase products. The buyer adaptation mechanism produces the belief that the buyer has about the seller pricing policy and a parameter that indicates his/her own pricing policy which yields the buyer offers in the upcoming rounds. Moreover, the buyer is based on FL system that derives the appropriate actions at every round of the BG. Our results show that the combination of Fuzzy Logic (FL) with the above-mentioned techniques provides an efficient decision mechanism in the buyer side that in specific scenarios outperforms an optimal stopping model.

인터넷상점의 가격변화에 대한 실증분석

With the advancement of Internet, electronic commerce has rapidly expanded and considered as a major retail channel. In the early days of the Internet, many studies compared offline and online stores on their price level and dispersion. Since e-commerce is considered matured, we need to see price change behavior in e-commerce rather than comparing it with traditional channels. Thus, this study investigated the trend of price changes in e-commerce. The data that was gathered from a price comparison site also contained six product categories. The decrease in minimum and average price was identified and the increase in maximum price was also identified. The critical factors in the increase of maximum price are number of sellers (positive effect) and the time span after a product was released (negative effect). The differences in price changes between product categories were also investigated.

Information revelation in competitive markets

This paper analyzes a market with multiple sellers and horizontally differentiated products. We investigate the sellers’ incentives to reveal product relevant information that affects the buyer’s private valuation. The main finding is that if the number of sellers is sufficiently large, there is a unique symmetric equilibrium with full information disclosure. Thus, unlike the results by Lewis and Sappington (Int Econ Rev 35:309–327, 1994) and Johnson and Myatt (Am Econ Rev 93:756–784, 2006) for monopoly, which state that the monopolist reveals either full information or no information, intense competition results in a single extreme with respect to information disclosure. We show that the market is always inefficient, but the magnitude of inefficiency converges to zero at a high rate as competition intensifies.

Multiplying Themselves: Women Cosmetics Sellers in Ecuador

With the “feminization of labor,” more women in developing countries are working for pay, but that work is precarious and often exists in the informal economy. This paper examines the situation of Ecuadorian women selling cosmetics through a multilevel direct sales organization in which earnings are dependent on the amount of product sold and the number of sellers recruited. This relatively new type of gendered, paid employment promises to help women achieve balance between paid work and family responsibilities. Using ethnographic methods to explore direct-selling mothers' identities, strategies, and struggles, this study finds that such a balance remains elusive for these women sellers, despite the purported flexibility of direct sales work. It discusses the finding that women think about their paid work and family roles as connected and examines the myth prevalent among direct sellers that successfully balancing paid work and family comes from “organizing yourself.”

An equilibrium model of advertising, production and exchange

An equilibrium model of advertising, production and exchange is developed. Sellers advertise and produce. In contrast to models where one side is often kept to its reservation value, both sides of the exchange are made worse off due to distortive advertising. Buyers read advertising, screen for quality of each good, choose prices optimally and provide a numeraire good (or money) in exchange. The total numbers of sellers of the two types determine the total production. The total number of buyers determines the total presence of the numeraire good. An advertising attention function adjusts how buyers pay attention to advertising. The competitiveness of the market plays a role. Advertising causes scarcity of goods which causes a price effect which is adjusted for. Search costs for choosiness are introduced for buyers screening for quality, which reduces the amount of the numeraire good held by buyers, causing less to be provided to sellers.

The holdout problem and urban sprawl: Experimental evidence

Conventional wisdom as well as economic theory suggests it is more costly to reassemble fragmented land due to transactions costs and strategic bargaining costs. Both costs are expected to increase with the number of sellers. Inefficient allocation of land resources may result including property entropy ( Parisi, 2002), urban sprawl ( Miceli and Sirmans, 2007) and deteriorating inner cities. Given the difficulty of observing actual values attached by buyers and sellers to land, little empirical evidence exists to support the conventional wisdom and theoretical work. We use experimental methods to examine transactions costs and strategic bargaining costs in a land-assembly market game with one buyer, 1–4 sellers, and complementary exchanges. The buyer’s final earnings vary inversely with the number of sellers, ceteris paribus, indicating an incentive to purchase consolidated land. Delay costs reduce holdout, but result in lower payoffs for both buyers and sellers. Competition between sellers reduces holdout and the buyer’s total purchase price.

Online Price Dispersion: What Can We Learn from Amazon Marketplace?

11 April 2012 Abstract Online price dispersion has remained a puzzle for many years. In this article, we test the effects of a range of factors identified in the literature including vendor strategy, market structure, vendor heterogeneity and the time dimension. We use a dataset collected from the Amazon.com, Amazon.uk and the Amazon.fr marketplaces for books, CDs and DVDs from March to November 2006. First, using posted prices, we show that vendors make few modifications to their prices over time (once every 20 to 30 days), and those variations that they do make are relatively small (on average 15 cents). Secondly, we compare posted prices to transaction prices and we show that transaction prices do not necessarily correspond to the lowest posted price but rather centered around the median prices. Thirdly, we show that online price dispersion increases with the number of sellers mainly because new sellers price their product significantly lower that the current median price. Fourth, we show that there is a significant reputation premium of about 10 to 15%. A well established seller can charge a price 10 to 20% higher than the average seller. Our estimation results support the idea that price dispersion is sensitive to the maturity of the market. Consistent with our finding that price dispersion increases with the number of sellers, less mature markets, such as France with fewer sellers, exhibit lower price dispersion. Similarly, we find that large sellers account for a greater proportion of transactions in France than in the U.S. Lastly, we find that public policy can affect price dispersion: a French law limiting discounting on new books results in lower price dispersion in the French book market relative to book markets in the US and UK and relative to the French market for other goods.

Sorghum market integration study in Ghana

The study sought to examine the variability and trends in sorghum supply and prices, factors affecting volumes of sorghum traded, and whether the sorghum market was integrated. To achieve the set objectives, primary and secondary data were used. A random sample size of 160respondents, including 20 per cent sorghum grain itinerant traders, 43 per cent wholesalers, 17 per cent retailers, and 20 per cent consumers were interviewed in selected markets in Northern and Brong Ahafo regionsin Ghana. These markets were selected by production and utilization levels, and accessibility as well as potential for sorghum market expansion. Monthly observations over the period 1990-1999 on sorghum prices at the wholesale level for the selected markets were used forthe market integration analysis. The study adopted various analytical approaches, including the basic Ravallion model with some modifications and the Error Correction model, to test for sorghum market integration.The study showed that the actual marketing of sorghum was organized by many individual private traders with no barrier to market entry. Factors affecting volumes of sorghum traded are variable and location-specific. These factors include transportation difficulties, limited supply, inadequate capital, lack of finance, number of sellers and buyers, risk of price changes, and quality deterioration. The study established lack of short-run integration in 75 per cent of the sorghum market pairs studied. The priceadjustment mechanism between local market and reference market was relatively slow, but markets were integrated in the long run. This could be attributed to lack of an adequate market information system at therural markets, and possibly transportation difficulties. It was recommended that the efficiency of the sorghum marketing system needed to be improved by strengthening the market information system.

When do Large Buyers Pay Less? Experimental Evidence

The rise of mega‐retailers has precipitated a growing literature on large‐buyer discounts. According to Rotemberg and Saloner [1986] and Snyder [1998], large buyers' ability to obtain price discounts depends on their relative size and the degree of seller competition. I test experimentally implications of this theory concerning the number of sellers and the sizes of buyers in the market. The results track the comparative‐statics predictions to a surprising extent. Subtle changes in the buyer‐size distribution or number of sellers can create or negate large‐buyer discounts. The results highlight the previously unexplored role of the demand structure in determining buyer‐size discounts.

Efficient allocation and composition of distributed storage

In this paper, we investigate the composition of cheap network storage resources to meet specific availability and capacity requirements. We show that the problem of finding the optimal composition for availability and price requirements can be reduced to the knapsack problem, and propose three techniques for efficiently finding approximate solutions. The first algorithm uses a dynamic programming approach to find mirrored storage resources for high availability requirements, and runs in the pseudo-polynomial O(n 2 c) time where n is the number of sellers’ resources to choose from and c is a capacity function of the requested and minimum availability. The second technique is a heuristic which finds resources to be agglomerated into a larger coherent resource, with complexity of O(nlog n). The third technique finds a compromise between capacity and availability (which in our phrasing is a complex integer programming problem) using a genetic algorithm. The algorithms can be implemented on a broker that intermediates between buyers and sellers of storage resources. Finally, we show that a broker in an open storage market, using the combination of the three algorithms can more frequently meet user requests and lower the cost of requests that are met compared to a broker that simply matches single resources to requests.

Capacity and entry issues in online exchanges

With the advent of open standards and Internet technologies, the number of sellers who can participate in online exchanges is greatly increased. We model the competition between identical sellers vying for the same business, and find that there exists a mixed-strategy equilibrium in prices. The results help us understand the dynamics between a seller’s capacity and his motivation to participate in an auction.

An ascending double auction

We show why the failure of the affiliation assumption prevents the double auction from achieving efficient outcomes when values are interdependent. This motivates the study of an ascending price version of the double auction. It is shown that when there is a sufficiently large, but still finite, number of sellers, this mechanism has an approximate perfect Bayesian equilibrium in which traders continue bidding if and only if their true estimates of the ‘value’ of the object being traded exceed the current price. This equilibrium is ex post efficient and has a rational expectations property in the sense that along the equilibrium path traders appear to have made the best possible trades conditional on information revealed by the trading process.

Thick markets, market competition and pricing dynamics: evidence from retailers

AbstractBy using store‐level transaction price data for books in Ann Arbor, Michigan, and music CDs in Natick, Massachusetts, the implications of thick markets and the intensity of market competition on price markups and the synchronization in price adjustments are empirically tested. The data indicate that for books, actual price markups are 6% lower than the suggested price markups, while for music CDs, they are 3.6% lower. Popular items are more heavily discounted than less popular ones. The data show that a 10% increase in national sales of a given book title results in a 0.06% drop in price markups. Also, market competition has a non‐linear depressing effect on price markups that becomes stronger for widely known popular items. Finally, a 10% increase in the number of sellers in the market lead to a 5.8% increase in the likelihood of a price adjustment and a 2.2% increase in the share of sellers that synchronize their price adjustments. Copyright © 2007 John Wiley & Sons, Ltd.