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The Effect of eBay Seller Reputation on Prices: A Natural Experiment

Author

Listed:
  • Jannett Highfill

    (Bradley University)

  • Kevin O'Brien

    (Bradley University)

  • Bashir Qasmi

    (South Dakota State University)

  • Richard Gretz

    (University of Texas, San Antonio)

Abstract

In online auctions seller reputation may be a signal of seller reliability and thus affect the final selling price. This study uses a unique data set for "muscle car" parts sold on eBay; data was collected by one specific online seller who abruptly changed the seller name. Two sets of regressions were run, one with feedback variables for all auctions and a second set with the latter and some terms which interacted the feedback variables with a binary variable indicating whether an auction occurred before or after the seller's name change. Seller reputation after the price change, measured by the positive feedback interaction term, increased final price, while the neutral and negative feedback interaction terms decreased final price. This finding indicates the importance of seller reputation for winning auction prices when the seller is a new entrant to eBay auctions. There was no such effect on profit margins.

Suggested Citation

  • Jannett Highfill & Kevin O'Brien & Bashir Qasmi & Richard Gretz, 2022. "The Effect of eBay Seller Reputation on Prices: A Natural Experiment," Journal of Economic Insight, Missouri Valley Economic Association, vol. 48(2), pages 43-56.
    • Handle: RePEc:mve:journl:v:48:y:2022:i:2:p:43-56
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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L8 - Industrial Organization - - Industry Studies: Services

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