The effect of competition on eBay

Peter Newberry

International Journal of Industrial Organization, 2015, vol. 40, issue C, 107-118

Abstract: I examine the effect of competition on eBay Motors. I specify a simple model of auction choice and show that the expected transaction price falls with an increase in the number of competitors. I then test for this effect using data from 5,500 auctions for Chevrolet Corvettes. To address potential endogeneity of the level of competition, I introduce an instrument which takes advantage of the unique features of eBay. Results indicate that an additional competitor leads to a 6% reduction in the final transacted price ($960 for the average car). Further, I provide evidence that this effect is due to the thinning of the bidder market rather than dynamic bidding.

Keywords: Auctions; eBay; Simultaneous auctions; Auction choice; Endogenous entry (search for similar items in EconPapers)
JEL-codes: D44 L11 L13 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:40:y:2015:i:c:p:107-118

DOI: 10.1016/j.ijindorg.2015.03.007

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