Ebay Economics: Factors That Determine Online Auction Prices
We analyze online auction prices for top range Bordeaux wine sold on the German eBay site, evaluating the impact of eBay specifics such as auction length, timing of the auction end (day of week, time of day), number of bids, buyer interest (page count), seller reputation, initial prices, picture effects, or private auctions (bidder identity remains undisclosed). Moreover, we evaluate the impact of Parker's rating and whether this quality information is revealed. Other variables of interest are wine age, brands, regional origin, and the 1855 classification. We estimate a main model and two subsets (with page counter, initial bid equal 1). Our hedonic estimation of the full sample reveals that relative to Sundays, wine auctions ending on Fridays resulted in significantly higher prices (about 9%). Thus, we cannot confirm a weekend effect. Time of day effects are insignificant relative to the base period (21h-22h CET), except when auctions end in the morning (8h-12h CET) or late evening (22h-23 CET) and prices are 11% lower. We observe a small auction length effect (+2%). Seller reputation showed no significant impact on the final auction price except when the initial bid is 1. The number of bids showed a significant but small impact on final prices (+1.7%). The private auction effect (hidden bidder identity) is also significant at 5%. Moreover, Parker points carry an elasticity of 3.6 and disclosing them in the auction (information disclosure effect) results in a premium of 12%. Château (brand) effects are highly significant ranging up to 150% (Châteaux Pétrus and Margaux). Appellation premiums may exceed 90% (Pomerol). 1855 classifications are significant and in correct order except for Quatrièmes Crus.
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