Aspects of bidding behavior on eBay auctions
Founded in 1995, eBay.com is an online auction website where people and businesses can buy and sell a broad variety of goods. Nowadays, eBay is a multi-billion dollar business with operations in over thirty countries.
For every offered product, there is a fixed end date and time set by the seller. Furthermore, the seller can choose to apply different parameters to customize the online-auction.
In the following essay, the influence of these parameters on the auction price, such as the reserve price, the auction-style listings, the Buy It Now and minimum price, the reputation and the absence of monopoly, will be discussed.
An auction can have different time spans (3, 5, 7 or 10 days). It is proven that the longer a product is available, the higher the selling price will be since more potential buyer will get the opportunity to enter the auction.
If a seller does not want to sell his product below a certain price, he can create an auction-style listing (auction-style listings allow the seller to offer one or more items for sale for a specified number of days) and set a reserve price. The amount of this price is hidden; however bidders can see that a reserve price exists. If the seller does not get a bid for at least the amount of his reserve, he is not forced to sell his item. Hence, the reserve price raises the price level. Contrariwise, the secret reserve price lowers the price level by reducing the probability of the auction resulting in a sale (Lucking-Reiley & Katkar, 2000).
The Buy It Now price must be at least as high as the reserve price. As the name indicates, a BIN price is a price at which the seller would give away his item right away without pursuing the auction.
Other influences are exercised by the minimum price for instance. A seller can control how low the bid can go by setting a minimum price for its product. That way, the seller can differentiate his product from others by determining the...