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The Extent of Internet Auction Markets

Author

Listed:
  • Laurens de Haan

    (Erasmus University Rotterdam, and University of Lisbon)

  • Casper de Vries

    (Erasmus University Rotterdam)

  • Chen Zhou

    (Erasmus University Rotterdam)

Abstract

See also the publication in the Journal of Economic Theory . Internet auctions attract numerous agents, but only a few become active bidders. A major difficulty in the structural analysis of internet auctions is that the number of potential bidders is unknown. Under the independent private value paradigm (IPVP)the valuations of the active bidders form a specific record sequence. This record sequence implies that if the number n of potential bidders is large, the number of active bidders is approximately 2 log n, explaining the relative inactivity. Empirical evidence for the 2 log n rule is provided. This evidence can also be interpreted as a weak test of the IPVP.

Suggested Citation

  • Laurens de Haan & Casper de Vries & Chen Zhou, 2008. "The Extent of Internet Auction Markets," Tinbergen Institute Discussion Papers 08-041/2, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20080041
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    References listed on IDEAS

    as
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    5. Bajari, Patrick & Hortacsu, Ali, 2003. "The Winner's Curse, Reserve Prices, and Endogenous Entry: Empirical Insights from eBay Auctions," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 329-355, Summer.
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    More about this item

    Keywords

    bids as records; number of active bidders;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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