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Empirical Analyses of Nonlinear Effects of Reserve Prices on Ending Prices in Online Auctions

Jidong Han, Peter Popkowski Leszczyc and Zelin Zhang

Journal of Interactive Marketing, 2021, vol. 54, issue C, 86-102

Abstract: Empirical results about the effect of open reserve price on ending prices in auctions are mixed, with some researchers finding a positive effect on ending price and others reporting a negative or no effect. The objective of this research is to propose a new theoretical framework. First, without an open reserve price, auctions attract more bidders, resulting in increased competition and higher ending prices—a so-called competition effect. Second, a high open reserve price may serve as a price floor or a reference price, influencing bidders' valuations and increasing ending prices.

Keywords: Auctions; Reserve price; Quantile regression; Reference-price effect (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.intmar.2020.08.003

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