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The Determinants of Price in Online Auctions: More Evidence from Quantile Regression

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Author Info
Sun, Chia-Hung () (University of Wollongong)
Hsu, Ming-Fei (National Chung Cheng University, Taiwan)

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Abstract

This study explores how seller reputations affect auction prices, and concludes that earlier findings may be biased due to the misspecification of seller reputation. This paper contributes to the literature by offering significant empirical evidence using Taiwanese Internet auction data. Our study reveals that the influence of seller reputations on auction prices is significant, irrespective of the assumptions of linear and non-linear relationships with price. However, failure to consider the non-linear setting of seller reputation would have led us to overestimate the impact of reputations on prices because marginal returns to an incremental increase in reputation declines rapidly for sellers who have more than 15 scores. In addition, using quantile regression, this study finds evidence of considerable differences in their impact on auction prices dependent on the distribution of price levels.

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File URL: http://www.uow.edu.au/content/groups/public/@web/@commerce/@econ/documents/doc/uow039115.pdf
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Publisher Info
Paper provided by School of Economics, University of Wollongong, NSW, Australia in its series Economics Working Papers with number wp07-18.

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Length: 25 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:uow:depec1:wp07-18

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Postal: School of Economics, University of Wollongong, Northfields Avenue, Wollongong NSW 2522 Australia
Phone: +612 4221-3663
Fax: +612 4221-3725
Web page: http://www.uow.edu.au/commerce/econ/
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Related research
Keywords: Internet auction; reputation; Taiwan; Yahoo! Kimo; quantile regression;

Other versions of this item:

Find related papers by JEL classification:
D8 - Microeconomics - - Information, Knowledge, and Uncertainty
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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.:
  1. Cabral, Luís M B & Hortaçsu, Ali, 2004. "The Dynamics of Seller Reputation: Theory and Evidence from eBay," CEPR Discussion Papers 4345, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January. [Downloadable!] (restricted)
  3. Budish, Eric B. & Takeyama, Lisa N., 2001. "Buy prices in online auctions: irrationality on the internet?," Economics Letters, Elsevier, vol. 72(3), pages 325-333, September. [Downloadable!] (restricted)
  4. Patrick Bajari & Ali Hortacsu, 2004. "Economic Insights from Internet Auctions," Journal of Economic Literature, American Economic Association, vol. 42(2), pages 457-486, June. [Downloadable!] (restricted)
  5. John Wooders & Stanley S. Reynolds, 2004. "Auctions with a Buy Price," Econometric Society 2004 North American Summer Meetings 130, Econometric Society.
    Other versions:
  6. Sanjeev Dewan & Vernon Hsu, 2004. "Adverse Selection In Electronic Markets: Evidence From Online Stamp Auctions," Journal of Industrial Economics, Blackwell Publishing, vol. 52(4), pages 497-516, December. [Downloadable!] (restricted)
  7. Cynthia G. McDonald & V. Carlos Slawson, 2002. "Reputation in An Internet Auction Market," Economic Inquiry, Oxford University Press, vol. 40(4), pages 633-650, October.
  8. Daniel Houser & John Wooders, 2006. "Reputation in Auctions: Theory, and Evidence from eBay," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 15(2), pages 353-369, 06. [Downloadable!] (restricted)
  9. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall. [Downloadable!] (restricted)
  10. Timothy Mathews, 2004. "The Impact of Discounting on an Auction with a Buyout Option: a Theoretical Analysis Motivated by eBay’s Buy-It-Now Feature," Journal of Economics, Springer, vol. 81(1), pages 25-52, 01. [Downloadable!] (restricted)
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