A comparison of different pay-per-bid auction formats

Kim, Ju-Young and Brünner, Tobias and Skiera, Bernd and Natter, Martin (2014) A comparison of different pay-per-bid auction formats. International Journal of Research in Marketing, 31 (4). pp. 368-379. ISSN 0167-8116

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A comparison of different pay-per-bid auction formats

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Abstract

Pay-per-bid auctions are a popular new type of Internet auction that is unique because a fee is charged for each bid that is placed. This paper uses a theoretical model and three large empirical data sets with 44,614 ascending and 1,460 descending pay-per-bid auctions to compare the economic effects of different pay-per-bid auction formats, such as different price increments and ascending versus descending auctions. The theoretical model suggests revenue equivalence between different price increments and descending and ascending auctions. The empirical results, however, refute the theoretical predictions: ascending auctions with smaller price increments yield, on average, higher revenues per auction than ascending auctions with higher price increments, but their revenues vary much more strongly. On average, ascending auctions yield higher revenues per auction than descending auctions, but results differ strongly across product categories. Additionally, revenues per ascending auction also vary much more strongly.

Keywords:Pay-per-bid auction, Bidding fees, Online marketing, Electronic commerce, Pricing, Auctions, NotOAChecked
Subjects:N Business and Administrative studies > N500 Marketing
L Social studies > L120 Microeconomics
L Social studies > L100 Economics
L Social studies > L110 Applied Economics
Divisions:Lincoln International Business School
ID Code:18585
Deposited On:11 Sep 2015 10:04

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