A comparison of different pay-per-bid auction formats

Ju-Young Kim, Tobias Brünner, Bernd Skiera and Martin Natter

International Journal of Research in Marketing, 2014, vol. 31, issue 4, 368-379

Abstract: Pay-per-bid auctions are a popular new type of Internet auction that is unique because a fee is charged for each bid that is placed. This paper uses a theoretical model and three large empirical data sets with 44,614 ascending and 1,460 descending pay-per-bid auctions to compare the economic effects of different pay-per-bid auction formats, such as different price increments and ascending versus descending auctions. The theoretical model suggests revenue equivalence between different price increments and descending and ascending auctions. The empirical results, however, refute the theoretical predictions: ascending auctions with smaller price increments yield, on average, higher revenues per auction than ascending auctions with higher price increments, but their revenues vary much more strongly. On average, ascending auctions yield higher revenues per auction than descending auctions, but results differ strongly across product categories. Additionally, revenues per ascending auction also vary much more strongly.

Keywords: Pay-per-bid auction; Bidding fees; Online marketing; Electronic commerce; Pricing; Auction (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ijrema:v:31:y:2014:i:4:p:368-379

DOI: 10.1016/j.ijresmar.2014.04.003

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