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Empirical Analyses of Nonlinear Effects of Reserve Prices on Ending Prices in Online Auctions

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  • Han, Jidong
  • Popkowski Leszczyc, Peter T.L.
  • Zhang, Zelin

Abstract

Empirical results about the effect of open reserve price on ending prices in auctions are mixed, with some researchers finding a positive effect on ending price and others reporting a negative or no effect. The objective of this research is to propose a new theoretical framework. First, without an open reserve price, auctions attract more bidders, resulting in increased competition and higher ending prices—a so-called competition effect. Second, a high open reserve price may serve as a price floor or a reference price, influencing bidders' valuations and increasing ending prices.

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  • Han, Jidong & Popkowski Leszczyc, Peter T.L. & Zhang, Zelin, 2021. "Empirical Analyses of Nonlinear Effects of Reserve Prices on Ending Prices in Online Auctions," Journal of Interactive Marketing, Elsevier, vol. 54(C), pages 86-102.
    • Handle: RePEc:eee:joinma:v:54:y:2021:i:c:p:86-102
    DOI: 10.1016/j.intmar.2020.08.003
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