An Empirical Analysis of Bidding Fees in Name-your-own-price Auctions

Martin Bernhardt and Martin Spann

Journal of Interactive Marketing, 2010, vol. 24, issue 4, 283-296

Abstract: Interactive pricing mechanisms integrate customers into the price-setting process by letting them submit bids. Name-your-own-price auctions are such an interactive pricing mechanism, where buyers' bids denote the final price of a product or service in case they surpass a secret threshold price set by the seller. If buyers are given the flexibility to bid repeatedly, they might try to incrementally bid up to the threshold. In this case, charging fees for the option to place additional bids could generate extra revenue and reduce incremental bidding behavior. Based on an economic model of consumer bidding behavior in name-your-own-price auctions and two empirical studies, we analytically and empirically investigate the effects bidding fees have on buyers' bidding behavior. Moreover, we analyze the impact of bidding fees on seller revenue and profit based on our empirical results.

Keywords: Interactive pricing; Bidding fees; Laboratory experiment; Field experiment (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joinma:v:24:y:2010:i:4:p:283-296

DOI: 10.1016/j.intmar.2010.05.001

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