| dc.description.abstract | This dissertation is mainly focused on the seller’s behavior in Internet auctions, including the choice of listing formats, the setting of reserve price. I study the effects of the seller’s listing-format choice on auction outcomes and the relationships between the reserve prices and listing formats. Furthermore, I also investigate the influences of the different duration of warranty and the different product source — the parallel imports and the authorized products — on transaction results.
The first part empirically studies why the sellers of identical commodities adopt different listing formats in online auctions, and the consequences thereof. We postulate that the sellers adopt different listing formats because of the differences in their experience and inventory size. We first use these two characteristics to endogenize the seller’s choice between three listing formats: fixed-price posting, buy-it-now (BIN) auction, and pure auction. We then estimate the differences in sales rate, transaction price, and sale duration between the three formats. We find that the fixed-price format results in the highest transaction price and the lowest sale rate. The pure and BIN auctions have similar sales rate and transaction price, but the latter has the shortest sale duration among all three. These results strongly suggest that there is a tradeoff between price and sale probability for the seller’s choice between an auction (including pure and BIN) and a fixed-price listing, and that both risk and time preference considerations are important in adopting BIN.
As to the second part, we propose a simple model of auctions with an impatient seller who chooses the reserve price and the BIN price to maximize revenue. The three main sales channels in the online auction (the pure auction, the BIN auction, and the fixed-price sale) are each shown to be an optimal solution for the sellers with certain degrees of time-preference. The theory also predicts that the optimal posted price for the fixed-price listing is greater than the optimal reserve price for the BIN auction, which in turn is greater than that for the pure auction. This prediction is confirmed by data from eBay’s auction of iPods. Using the seller’s inventory as a proxy for his degree of time-preference, the data also confirm the theoretical prediction that there is an inverse relationship between the optimal reserve price and the seller’s time impatience.
The last part investigates whether there exists any difference in transaction results between commodities which are sold by authorized sellers and those which are parallel imports by using data from Taiwan’s Yahoo! auctions of Nikon cameras. We find that the parallel imports and the authorized products differ not only in the warranty duration offered by the sellers, but also in the formats in which they are listed, both of which substantially affect trade probability and transaction price. We show that, after taking into account the endogenous choice of listing formats and the characteristics of the sellers and the items, an authorized product has a 7% higher trade probability than that of a parallel import and, if there is a sale, the transaction price as a ratio of the manufacturer’s suggested retail price is 9.3% higher. A small number of less experienced parallel import sellers, in an attempt to maintain a price comparable to the authorized product, list their items in pure auction with unusually high starting bids. This accounts for the overall lower trade probability for the parallel imports. If we disregard these sellers who adopt pure auction, the authorized product has higher transaction price than, but about the same trade probability as the parallel import. | en_US |