How do sellers benefit from Buy-It-Now prices in eBay auctions?

Radosveta Ivanova-Stenzel, Tim Grebe and Sabine Kröger ()

VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy from Verein für Socialpolitik / German Economic Association

Abstract: We investigate experimentally on eBay how sellers set prices in "Buy-It-Now" (BIN) auctions. We find that the eBay format leads to prices substantially below those expected in second-price auctions. Moreover, our results reveal that the information available on eBay about buyer experience and bidding behavior correlates with the observed price deviation. Sellers respond strategically to this information. More experienced sellers ask for higher BIN-prices, whereas seller risk aversion does not effect their price decisions. Compared to an eBay auction without a BIN-price, the BIN-auction is more efficient and generates significantly higher revenue.

Keywords: experience; online markets; eBay; BIN price; private value; experiment (search for similar items in EconPapers)
JEL-codes: C72 C91 D44 D82 L1 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-des
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc19:203606

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