IDEAS home Printed from https://ideas.repec.org/a/eee/indorg/v56y2018icp107-144.html
   My bibliography  Save this article

The seller's listing strategy in online auctions: Evidence from eBay

Author

Listed:
  • Chen, Kong-Pin
  • Lai, Hung-pin
  • Yu, Ya-Ting

Abstract

This paper studies the seller's online listing strategy and its consequences. By focusing on the fixed-price posting, buy-it-now auction and regular auction, we empirically investigate how the sellers choose the listing format and its associated strategic instruments to better understand their strategic behavior. An empirical model that addresses plausible concerns about sample selection bias and endogeneity is constructed to capture a seller's strategic behavior and examine how auction outcomes are related to this behavior. Based on the estimated model, we then conduct a counterfactual analysis. We find a tradeoff between the expected revenue and sale duration for the three listing formats.

Suggested Citation

  • Chen, Kong-Pin & Lai, Hung-pin & Yu, Ya-Ting, 2018. "The seller's listing strategy in online auctions: Evidence from eBay," International Journal of Industrial Organization, Elsevier, vol. 56(C), pages 107-144.
  • Handle: RePEc:eee:indorg:v:56:y:2018:i:c:p:107-144
    DOI: 10.1016/j.ijindorg.2017.11.003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167718716303198
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Che, XiaoGang, 2011. "Internet auctions with a temporary buyout option," Economics Letters, Elsevier, vol. 110(3), pages 268-271, March.
    2. Kevin Hasker & Robin Sickles, 2010. "eBay in the Economic Literature: Analysis of an Auction Marketplace," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 37(1), pages 3-42, August.
    3. Subal Kumbhakar & Christopher Parmeter, 2010. "Estimation of hedonic price functions with incomplete information," Empirical Economics, Springer, vol. 39(1), pages 1-25, August.
    4. Patrick Bajari & Ali Hortaçsu, 2004. "Economic Insights from Internet Auctions," Journal of Economic Literature, American Economic Association, vol. 42(2), pages 457-486, June.
    5. Stanley Reynolds & John Wooders, 2009. "Auctions with a buy price," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(1), pages 9-39, January.
    6. Indranil Chakraborty & Georgia Kosmopoulou, 2004. "Auctions with shill bidding," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 24(2), pages 271-287, August.
    7. David H. Reiley, 2006. "Field experiments on the effects of reserve prices in auctions: more Magic on the Internet," RAND Journal of Economics, RAND Corporation, vol. 37(1), pages 195-211, March.
    8. Raul Gonzalez & Kevin Hasker & Robin C. Sickles, 2009. "AN ANALYSIS OF STRATEGIC BEHAVIOR INeBAY AUCTIONS," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 54(03), pages 441-472.
    9. Yingying Dong & Arthur Lewbel, 2015. "A Simple Estimator for Binary Choice Models with Endogenous Regressors," Econometric Reviews, Taylor & Francis Journals, vol. 34(1-2), pages 82-105, February.
    10. 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.
    11. Sun, Daewon & Li, Erick & Hayya, Jack C., 2010. "The optimal format to sell a product through the internet: Posted price, auction, and buy-price auction," International Journal of Production Economics, Elsevier, vol. 127(1), pages 147-157, September.
    12. Alvin E. Roth & Axel Ockenfels, 2002. "Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet," American Economic Review, American Economic Association, vol. 92(4), pages 1093-1103, September.
    13. Harris, Milton & Raviv, Artur, 1981. "A Theory of Monopoly Pricing Schemes with Demand Uncertainty," American Economic Review, American Economic Association, vol. 71(3), pages 347-365, June.
    14. David Lucking‐Reiley & Doug Bryan & Naghi Prasad & Daniel Reeves, 2007. "Pennies From Ebay: The Determinants Of Price In Online Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 55(2), pages 223-233, June.
    15. Bajari, Patrick & Hortacsu, Ali, 2003. "The Winner's Curse, Reserve Prices, and Endogenous Entry: Empirical Insights from eBay Auctions," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 329-355, Summer.
    16. 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.
    17. Wang, Ruqu, 1993. "Auctions versus Posted-Price Selling," American Economic Review, American Economic Association, vol. 83(4), pages 838-851, September.
    18. Hammond, Robert G., 2010. "Comparing revenue from auctions and posted prices," International Journal of Industrial Organization, Elsevier, vol. 28(1), pages 1-9, January.
    19. Kultti, Klaus, 1999. "Equivalence of Auctions and Posted Prices," Games and Economic Behavior, Elsevier, vol. 27(1), pages 106-113, April.
    20. Timothy Mathews & Brett Katzman, 2006. "The role of varying risk attitudes in an auction with a buyout option," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 27(3), pages 597-613, April.
    21. Cynthia G. McDonald & V. Carlos Slawson, 2002. "Reputation in An Internet Auction Market," Economic Inquiry, Western Economic Association International, vol. 40(4), pages 633-650, October.
    22. Brisset Karine & Naegelen Florence, 2006. "Why the Reserve Price Should Not Be Kept Secret," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 6(1), pages 1-17, April.
    23. Hammond, Robert G., 2013. "A structural model of competing sellers: Auctions and posted prices," European Economic Review, Elsevier, vol. 60(C), pages 52-68.
    24. Shunda, Nicholas, 2009. "Auctions with a buy price: The case of reference-dependent preferences," Games and Economic Behavior, Elsevier, vol. 67(2), pages 645-664, November.
    25. Christine Amsler & Artem Prokhorov & Peter Schmidt, 2014. "Using Copulas to Model Time Dependence in Stochastic Frontier Models," Econometric Reviews, Taylor & Francis Journals, vol. 33(5-6), pages 497-522, August.
    26. Jong-Rong Chen & Kong-Pin Chen & Chien-Fu Chou & Ching-I Huang, 2013. "A Dynamic Model of Auctions with Buy-It-Now: Theory and Evidence," Journal of Industrial Economics, Wiley Blackwell, vol. 61(2), pages 393-429, June.
    27. Huang, Ching-I & Chen, Jong-Rong & Lee, Chiu-Yu, 2013. "Buyer behavior under the Best Offer mechanism: A theoretical model and empirical evidence from eBay Motors," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 11-33.
    28. Hila Etzion & Edieal Pinker & Abraham Seidmann, 2006. "Analyzing the Simultaneous Use of Auctions and Posted Prices for Online Selling," Manufacturing & Service Operations Management, INFORMS, vol. 8(1), pages 68-91, March.
    29. 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, January.
    30. Richard Guy Cox, 2005. "Optimal reservations prices and superior information in actions with common-value elements: evidence from field data," Ekonomia, Cyprus Economic Society and University of Cyprus, vol. 8(2), pages 142-167, Winter.
    31. Hidvegi, Zoltan & Wang, Wenli & Whinston, Andrew B., 2006. "Buy-price English auction," Journal of Economic Theory, Elsevier, vol. 129(1), pages 31-56, July.
    32. Kamins, Michael A & Dreze, Xavier & Folkes, Valerie S, 2004. "Effects of Seller-Supplied Prices on Buyers' Product Evaluations: Reference Prices in an Internet Auction Context," Journal of Consumer Research, Oxford University Press, vol. 30(4), pages 622-628, March.
    33. Xin Wang & Alan Montgomery & Kannan Srinivasan, 2008. "When auction meets fixed price: a theoretical and empirical examination of buy-it-now auctions," Quantitative Marketing and Economics (QME), Springer, vol. 6(4), pages 339-370, December.
    34. Subir Bose & Arup Daripa, 2009. "Optimal sale across venues and auctions with a buy-now option," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(1), pages 137-168, January.
    35. Levin, Dan & Smith, James L, 1996. "Optimal Reservation Prices in Auctions," Economic Journal, Royal Economic Society, vol. 106(438), pages 1271-1283, September.
    36. Tanjim Hossain, 2008. "Learning by bidding," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 509-529, June.
    37. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
    38. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    39. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    40. René Kirkegaard & Per Baltzer Overgaard, 2008. "Buy‐out prices in auctions: seller competition and multi‐unit demands," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 770-789, September.
    41. Edieal J. Pinker & Abraham Seidmann & Yaniv Vakrat, 2003. "Managing Online Auctions: Current Business and Research Issues," Management Science, INFORMS, vol. 49(11), pages 1457-1484, November.
    42. Jeffrey A. Livingston, 2005. "How Valuable Is a Good Reputation? A Sample Selection Model of Internet Auctions," The Review of Economics and Statistics, MIT Press, vol. 87(3), pages 453-465, August.
    43. Bauner, Christoph, 2015. "Mechanism choice and the buy-it-now auction: A structural model of competing buyers and sellers," International Journal of Industrial Organization, Elsevier, vol. 38(C), pages 19-31.
    44. Blomquist, Glenn C & Berger, Mark C & Hoehn, John P, 1988. "New Estimates of Quality of Life in Urban Areas," American Economic Review, American Economic Association, vol. 78(1), pages 89-107, March.
    45. Liran Einav & Theresa Kuchler & Jonathan Levin & Neel Sundaresan, 2015. "Assessing Sale Strategies in Online Markets Using Matched Listings," American Economic Journal: Microeconomics, American Economic Association, vol. 7(2), pages 215-247, May.
    46. Haruvy, Ernan & Popkowski Leszczyc, Peter T. L., 2010. "Internet Auctions," Foundations and Trends(R) in Marketing, now publishers, vol. 4(1), pages 1-75, March.
    47. Uri Simonsohn, 2010. "eBay's Crowded Evenings: Competition Neglect in Market Entry Decisions," Management Science, INFORMS, vol. 56(7), pages 1060-1073, July.
    48. Alexandre Ziegler & Edward P. Lazear, 2003. "The Dominance of Retail Stores," NBER Working Papers 9795, National Bureau of Economic Research, Inc.
    49. A T Brint, 2003. "Investigating buyer and seller strategies in online auctions," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 54(11), pages 1177-1188, November.
    50. Syngjoo Choi & Lars Nesheim & Imran Rasul, 2016. "Reserve Price Effects In Auctions: Estimates From Multiple Regression-Discontinuity Designs," Economic Inquiry, Western Economic Association International, vol. 54(1), pages 294-314, January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Online auction; Listing strategy; Auction outcome; Endogeneity; Special regressor; Counterfactual analysis;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:indorg:v:56:y:2018:i:c:p:107-144. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Haili He). General contact details of provider: http://www.elsevier.com/locate/inca/505551 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.