How Reduced Search Costs and the Distribution of Bidder Participation Affect Auction Prices

• 成果类型: Article
• 署名作者: Overby, Eric; Kannan, Karthik
• 署名单位: University System of Georgia; Georgia Institute of Technology; Purdue University System; Purdue University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2014.2043
• 发表日期: 2015
• 页码: 1398-1420
• 关键词: electronic commerce; search costs; multiple-object auctions; distribution of bidder participation

摘要

Electronic commerce allows bidders to find and participate in auctions regardless of location. This reduction in bidders' search costs has important effects on bidders' participation patterns and sellers' revenue. The demand expansion effect occurs when reduced search costs allow bidders to participate in more auctions. The demand distribution effect occurs when reduced search costs allow bidders to distribute themselves more evenly across auctions. We focus on the latter effect by modeling when a more even distribution of bidder participation across auctions increases seller revenue. We apply our analytical insights to 65,718 sequential auctions (comprising over 10 million vehicles) in the wholesale used vehicle market. We show that reduced search costs can increase seller revenue by smoothing the distribution of bidder participation across auctions, even if the aggregate amount of bidder participation remains constant. This contributes new results to the auction theory literature and generates novel insights for sellers seeking increased revenue.