Bidding behaviors in eBay auctions: secret reservation price and endogenous entry
AbstractThis paper analyzes the secret reservation price in eBay auctions. Under the assumptions of secret and public reservation price, the bidders choose the optimal bidding function and the seller selects equilibrium reservation price. This model argues that the choice of secret reservation price is rational for the seller, as they can generate higher revenue in certain conditions. It predicts that, under endogenous entry, secret reservation price leads to higher revenue since it attracts more bidders to the auction. This effect is more noticeable for luxury goods. However, secret and public reservation prices generate identical revenue for the seller if entry is exogenous. Furthermore, the results are supported by numerous recent empirical works.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 35081.
Date of creation: 2011
Date of revision:
Publication status: Published in Journal of Economics and Behavioral Studies 5.3(2011): pp. 326-331
eBay; auctions; secret reservation prices; endogenous entry; mechanism design;
Find related papers by JEL classification:
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-12-13 (All new papers)
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