The Fixed Price Offer Mechanism in Trade Me Online Auctions

Seamus Hogan, Hamish Kidd, Laura Meriluoto and Andrew Smith

Working Papers in Economics from University of Canterbury, Department of Economics and Finance

Abstract: The Fixed Price Offer (FPO) mechanism in Trade Me auctions allows sellers to make a take-it-or-leave-it offer at the conclusion of an unsuccessful auction. We investigate the effects of the FPO option on strategies and outcomes in independent-value auctions. The FPO option induces some bidders with a value above the seller’s reserve to wait for an FPO instead of bidding. Overall, the FPO option increases the probability of sale but reduces expected seller revenue compared to a standard auction. The impact of the FPO option is reduced when the number of bidders increases.

Keywords: fixed price offer; private value auction; on-line auction; optimal reserve price; second chance offer (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2010-08-13
New Economics Papers: this item is included in nep-cta and nep-gth
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https://repec.canterbury.ac.nz/cbt/econwp/1051.pdf (application/pdf)

Related works:
Journal Article: The fixed price offer mechanism in Trade Me online auctions (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:cbt:econwp:10/51

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