The fixed price offer mechanism in Trade Me online auctions
AbstractThe fixed-price-offer (FPO) mechanism in Trade Me auctions allows sellers to make a take-it-or-leave-it offer at the conclusion of an unsuccessful auction. Weinvestigate the effects of the FPO option on strategies and outcomes in independent-value auctions. The FPO option induces some bidders with a value above the seller's reserve to wait for an FPO instead of bidding. Overall, the FPO option increases the probability of sale but reduces expected seller revenue compared with a standard auction. The impact of the FPO option is reduced when the number of bidders increases.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal New Zealand Economic Papers.
Volume (Year): 45 (2011)
Issue (Month): 3 (September)
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Web page: http://www.tandfonline.com/RNZP20
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