When Auction Meets Fixed Price: A Theoretical and Empirical Examination of Buy-It-Now Auctions

Topics:
Pricing Strategy
Tags:
Auction
Source:
Carnegie Mellon University

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Overview: Recently fixed pricing and auctions have been brought together in a new pricing format that offers bidders the option of prematurely ending an auction at a fixed price. eBay calls this a 'Buy-it- Now' auction, uBid calls this 'UBuy it' and Yahoo auctions refer to this as a 'Buy Now'. This paper studies this new pricing format and answers the following research questions: why is fixed price used at traditional auctions, will buy-it-now increase the seller's profit, how is an optimal price determined, and how is the buy-it-now decision influenced by key factors such as the customer's cost of participating in the auction, the seller's reserve price, and the number of potential customers.

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Format: PDF | Size: 301KB | Date: Mar 2004 | Pages: 38

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