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Effects of Adoption of the Buy-price, Setting the Starting Bid Price, and Adoption of 'the Effective Fixed Price' on the Final Bid Prices in Internet Auctions  

Lee, Yong-Seon (우리은행)
Ahn, Byong-Hun (KAIST 테크노경영대학원)
Jang, Dae-Chul (KAIST 테크노경영대학원)
Publication Information
Journal of the Korean Operations Research and Management Science Society / v.32, no.1, 2007 , pp. 27-51 More about this Journal
Abstract
We analyze the effects of the sellers' strateiges on the final bid prices in internet auctions. We focus on the following three strategies of the seller adoption of the buy-price, setting the starting bid price, and adoption of 'the effective fixed price' which means that the starting bid price is set near the buy-price. In addition, the number of units sold single-unit or multi-unit, and item characteristics, such as whether the food is a search product (functional product) or an experience product (non-functional product), are also considered. We use real data on bids for 4 items from an online auction site. We find that in an auction for experience products when sold as single units, adopting the buy-price strategy raises the final bid price. We also find that in multi-unit auctions, starting the auction at 'the effective fixed price' raises the final bid price.
Keywords
Internet Auction; Fixed Price; Multi-unit Auction; Seller's Strategy; Buy-price; Starting Bid Price;
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