The optimal format to sell a product through the internet: Posted price, auction, and buy-price auction

Daewon Sun, Erick Li and Jack C. Hayya

International Journal of Production Economics, 2010, vol. 127, issue 1, 147-157

Abstract: Motivated by the proliferation of online selling, we study a seller's decision problem: The seller has one unit of product and needs to choose a selling format among three different ones (posted price, auction, and buy-price auction), as well as to decide upon the corresponding decision variables. By incorporating the auction participation cost of the bidders and the operational cost of the seller, we demonstrate that these two costs play an important role in the choice of a selling format. We first characterize and identify the customers' decision rule for buy-price auction and then present the seller's optimal choices by comparing the performance of the three formats. Through a comprehensive numerical study, we investigate the performance of the three selling formats by changing the experimental factors.

Keywords: Online; auction; E-commerce; Decision; making; optimization; Optimal; decision; rule; Game; theory; Strategic; behavior; Pricing (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925-5273(10)00186-6
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:127:y:2010:i:1:p:147-157

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().