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A pricing model for group-buying auction based on customers' waiting-time

Author

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  • Mahyar Sharif Vaghefi

  • Mahrad Sharif Vaghefi
  • Neshat Beheshti

Abstract

Group-buying auction is a new business model in e-commerce. This auction has its own characteristics that make it distinct from other types of auctions. Customers' waiting time is an inherent attribute for group-buying auction. However, this attribute is rarely considered in the previous pricing models. Therefore, finding an appropriate pricing model for it seems to be of great importance. In this paper, with the help of game-theory concepts and according to each customer's waiting time in group-buying auction, a pricing model for a duopolistic market is proposed which takes into account both customers' and sellers' satisfaction. The pricing model shows that customers' awareness of Internet group-buying auction is so important and if it is lower than a boundary value, then the group-buying seller could not compete in the market. The model emphasizes on economies of scale as a significant factor in the success of the auction. The model also stresses the importance of gaining customers with lower product value in the group-buying auction. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Mahyar Sharif Vaghefi & Mahrad Sharif Vaghefi & Neshat Beheshti, 2014. "A pricing model for group-buying auction based on customers' waiting-time," Marketing Letters, Springer, vol. 25(4), pages 425-434, December.
    • Handle: RePEc:kap:mktlet:v:25:y:2014:i:4:p:425-434
    DOI: 10.1007/s11002-013-9262-1
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    References listed on IDEAS

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    1. Kopalle, Praveen & Biswas, Dipayan & Chintagunta, Pradeep K. & Fan, Jia & Pauwels, Koen & Ratchford, Brian T. & Sills, James A., 2009. "Retailer Pricing and Competitive Effects," Journal of Retailing, Elsevier, vol. 85(1), pages 56-70.
    2. Krishnan S. Anand & Ravi Aron, 2003. "Group Buying on the Web: A Comparison of Price-Discovery Mechanisms," Management Science, INFORMS, vol. 49(11), pages 1546-1562, November.
    3. Garbarino, Ellen & Maxwell, Sarah, 2010. "Consumer response to norm-breaking pricing events in e-commerce," Journal of Business Research, Elsevier, vol. 63(9-10), pages 1066-1072, September.
    4. Ancarani, Fabio, 2002. "Pricing and the Internet:: Frictionless Commerce or Pricer's Paradise?," European Management Journal, Elsevier, vol. 20(6), pages 680-687, December.
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    Cited by:

    1. Tong Che & Zeyu Peng & Zhongsheng Hua, 2016. "Characteristics of online group-buying website and consumers intention to revisit: the moderating effects of visit channels," Electronic Commerce Research, Springer, vol. 16(2), pages 171-188, June.
    2. Guanqun Ni, 2019. "A pricing model for group buying based on network effects," PLOS ONE, Public Library of Science, vol. 14(1), pages 1-18, January.

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