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The Choice Of Opening Prices On Ebay

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  • MIKHAIL I. MELNIK
  • YONGSHENG XU
  • JAMES ALM

Abstract

In this paper we examine the choice of the opening bid on eBay by sellers of US Morgan dollar coins. We find that the opening bid is a function of the observed characteristics of the past transaction prices for the coin, the seller's characteristics and the fee structure imposed by the auctioneer. The results demonstrate that increasing the opening bid fee structure induces a lower optimal opening bid, while an increase in the degree of risk in the price distribution increases the opening bid. These results have important implications for market structure of online auction sites.

Suggested Citation

  • Mikhail I. Melnik & Yongsheng Xu & James Alm, 2009. "The Choice Of Opening Prices On Ebay," Manchester School, University of Manchester, vol. 77(4), pages 411-429, July.
    • Handle: RePEc:bla:manchs:v:77:y:2009:i:4:p:411-429
    DOI: 10.1111/j.1467-9957.2009.02105.x
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    References listed on IDEAS

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    1. Paul Resnick & Richard Zeckhauser & John Swanson & Kate Lockwood, 2006. "The value of reputation on eBay: A controlled experiment," Experimental Economics, Springer;Economic Science Association, vol. 9(2), pages 79-101, June.
    2. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    3. David Lucking‐Reiley & Doug Bryan & Naghi Prasad & Daniel Reeves, 2007. "Pennies From Ebay: The Determinants Of Price In Online Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 55(2), pages 223-233, June.
    4. Jean-Jacques Laffont, 1989. "The Economics of Uncertainty and Information," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121360, December.
    5. Lucking-Reiley, David, 2000. "Auctions on the Internet: What's Being Auctioned, and How?," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 227-252, September.
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    Cited by:

    1. Shiu, Ji-Liang & Sun, Chia-Hung D., 2014. "Modeling and estimating returns to seller reputation with unobserved heterogeneity in online auctions," Economic Modelling, Elsevier, vol. 40(C), pages 59-67.
    2. Liu, Kang Ernest & Shiu, Ji-Liang & Sun, Chia-Hung, 2013. "How different are consumers in Internet auction markets? Evidence from Japan and Taiwan," Japan and the World Economy, Elsevier, vol. 28(C), pages 1-12.
    3. Chia-Hung D. Sun & Yi-Bin Chiu & Ming-Fei Hsu, 2016. "The Determinants Of Price In Online Auctions: More Evidence From Quantile Regression," Bulletin of Economic Research, Wiley Blackwell, vol. 68(3), pages 268-286, April.

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