How much is a Dollar Worth? Tipping versus Equilibrium Coexistence on Competing Online Auction Sites
AbstractThe equilibrium model of Ellison, Fudenberg, and MÃ¶bius (2004) predicts that, if two competing auction sites are coexisting, then seller revenues and buyer-seller ratios on each site should be approximately equal. We examine these hypotheses using field experiments selling identical items on the eBay and Yahoo auction sites. We find evidence that is inconsistent with the equilibrium hypotheses, and suggest that the eBay-Yahoo market is in the process of tipping. Robust statistical tests indicate that revenues on eBay are consistently 20 to 70 percent higher than those on Yahoo. In addition, eBay auctions attract approximately two additional buyers per seller than equivalent Yahoo auctions. We also vary the Yahoo ending rule from a hard close to soft close but find no statistically or economically significant changes in revenue or numbers of bidders. Moreover, the magnitude of the revenue and buyer-seller ratio disparities remain inconsistent with the notion of equilibrium coexistence even after accounting for various differentiators between the sites.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Competition Policy Center, Institute for Business and Economic Research, UC Berkeley in its series Competition Policy Center, Working Paper Series with number qt3c21w91h.
Date of creation: 01 Oct 2006
Date of revision:
Contact details of provider:
Postal: F502 Haas, Berkeley CA 94720-1922
Phone: (510) 642-1922
Fax: (510) 642-5018
Web page: http://www.escholarship.org/repec/iber_cpc/
More information through EDIRC
Tipping; equilibrium coexistence; field experiments; auctions;
Other versions of this item:
- Jennifer Brown & John Morgan, 2009. "How Much Is a Dollar Worth? Tipping versus Equilibrium Coexistence on Competing Online Auction Sites," Journal of Political Economy, University of Chicago Press, vol. 117(4), pages 668-700, 08.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Glenn Ellison & Drew Fudenberg, 2003.
"Knife-Edge or Plateau: When do Market Models Tip?,"
Levine's Working Paper Archive
506439000000000098, David K. Levine.
- Glenn Ellison & Drew Fudenberg, 2003. "Knife Edge of Plateau: When Do Market Models Tip?," NBER Working Papers 9528, National Bureau of Economic Research, Inc.
- Fudenberg, Drew & Ellison, Glenn, 2003. "Knife-Edge or Plateau: When Do Market Models Tip?," Scholarly Articles 3160493, Harvard University Department of Economics.
- Glenn Harrison & John List, 2004.
Artefactual Field Experiments
00058, The Field Experiments Website.
- McAfee, R Preston, 1993. "Mechanism Design by Competing Sellers," Econometrica, Econometric Society, vol. 61(6), pages 1281-1312, November.
- repec:feb:framed:0052 is not listed on IDEAS
- John List & David Lucking-Reiley, 2000. "Demand reduction in a multi-unit auction: Evidence from a sportscard field experiment," Framed Field Experiments 00180, The Field Experiments Website.
- David Lucking-Reiley, 1999.
"Using field experiments to test equivalence between auction formats: Magic on the internet,"
Framed Field Experiments
00183, The Field Experiments Website.
- David Lucking-Reiley, 1999. "Using Field Experiments to Test Equivalence between Auction Formats: Magic on the Internet," American Economic Review, American Economic Association, vol. 89(5), pages 1063-1080, December.
- Hossain Tanjim & Morgan John, 2006.
"...Plus Shipping and Handling: Revenue (Non) Equivalence in Field Experiments on eBay,"
The B.E. Journal of Economic Analysis & Policy,
De Gruyter, vol. 5(2), pages 1-30, January.
- Tanjim Hossain & John Morgan, 2006. "...plus shipping and handling: Revenue (non) equivalence in field experiments on ebay," Natural Field Experiments 00270, The Field Experiments Website.
- John List & David Lucking-Reiley, 2002.
"Bidding behavior and decision costs in field experiments,"
Framed Field Experiments
00181, The Field Experiments Website.
- John A. List & David Lucking-Reiley, 2002. "Bidding Behavior and Decision Costs in Field Experiments," Economic Inquiry, Western Economic Association International, vol. 40(4), pages 611-619, October.
- John A. List & David Lucking-Reiley, 2000. "Bidding Behavior and Decision Costs in Field Experiments," Vanderbilt University Department of Economics Working Papers 0006, Vanderbilt University Department of Economics.
- Dan Ariely & Axel Ockenfels & Alvin E Roth, 2003.
"An Experimental Analysis of Ending Rules in Internet Auctions,"
506439000000000433, UCLA Department of Economics.
- Dan Ariely & Axel Ockenfels & Alvin E. Roth, 2005. "An Experimental Analysis of Ending Rules in Internet Auctions," RAND Journal of Economics, The RAND Corporation, vol. 36(4), pages 890-907, Winter.
- Roth, Alvin & Ockenfels, Axel & Ariely, Dan, 2005. "An Experimental Analysis of Ending Rules in Internet Auctions," Scholarly Articles 2579649, Harvard University Department of Economics.
- Dan Ariely & Axel Ockenfels & Alvin E. Roth, 2003. "An Experimental Analysis of Ending Rules in Internet Auctions," CESifo Working Paper Series 987, CESifo Group Munich.
- Dan Ariely & Axel Ockenfels & Alvin E. Roth, 2002. "An Experimental Analysis of Ending Rules in Internet Auctions," Papers on Strategic Interaction 2002-47, Max Planck Institute of Economics, Strategic Interaction Group.
- Michael R. Baye & John Morgan, 2001. "Information Gatekeepers on the Internet and the Competitiveness of Homogeneous Product Markets," American Economic Review, American Economic Association, vol. 91(3), pages 454-474, June.
- Gehrig, Thomas, 1998. "Competing markets," European Economic Review, Elsevier, vol. 42(2), pages 277-310, February.
- Jean-Charles Rochet & Jean Triole, 2002.
"Platform Competition in Two Sided Markets,"
FMG Discussion Papers
dp409, Financial Markets Group.
- van Raalte, Chris & Webers, Harry, 1998. "Spatial competition with intermediated matching," Journal of Economic Behavior & Organization, Elsevier, vol. 34(3), pages 477-488, March.
- Jesse A. Schwartz & Ricardo Ungo, 2003. "Merging Auction Houses," Vanderbilt University Department of Economics Working Papers 0303, Vanderbilt University Department of Economics.
- Caillaud, Bernard & Jullien, Bruno, 2003. " Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-28, Summer.
- Mark Mitchell & Todd Pulvino & Erik Stafford, 2002. "Limited Arbitrage in Equity Markets," Journal of Finance, American Finance Association, vol. 57(2), pages 551-584, 04.
- Alok Gupta & Stephen Parente & Pallab Sanyal, 2012. "Competitive bidding for health insurance contracts: lessons from the online HMO auctions," International Journal of Health Care Finance and Economics, Springer, vol. 12(4), pages 303-322, December.
- Laurent Lamy, 2010. ""Upping the ante": How to design efficient auctions with entry?," Working Papers halshs-00564888, HAL.
- Glover, Brent & Raviv, Yaron, 2012. "Revenue non-equivalence between auctions with soft and hard closing mechanisms: New evidence from Yahoo!," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 129-136.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lisa Schiff).
If references are entirely missing, you can add them using this form.