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THE CHOICE OF OPENING PRICES ON EBAY *
Author(s) -
MELNIK MIKHAIL I.,
XU YONGSHENG,
ALM JAMES
Publication year - 2009
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2009.02105.x
Subject(s) - liberian dollar , economics , database transaction , bid price , microeconomics , function (biology) , monetary economics , computer science , finance , database , evolutionary biology , biology
In this paper we examine the choice of the opening bid on eBay by sellers of US Morgan dollar coins. We find that the opening bid is a function of the observed characteristics of the past transaction prices for the coin, the seller's characteristics and the fee structure imposed by the auctioneer. The results demonstrate that increasing the opening bid fee structure induces a lower optimal opening bid, while an increase in the degree of risk in the price distribution increases the opening bid. These results have important implications for market structure of online auction sites.