The effect of competition on eBay

Peter W. Newberry

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

Abstract I examine the effect of competition on eBay Motors. I specify a simple model of auction choice and show that the expected transaction price falls with an increase in the number of competitors. I then test for this effect using data from 5,500 auctions for Chevrolet Corvettes. To address potential endogeneity of the level of competition, I introduce an instrument which takes advantage of the unique features of eBay. Results indicate that an additional competitor leads to a 6% reduction in the final transacted price ($960 for the average car). Further, I provide evidence that this effect is due to the thinning of the bidder market rather than dynamic bidding.

Original languageEnglish (US)
Article number2222
Pages (from-to)107-118
Number of pages12
JournalInternational Journal of Industrial Organization
Volume40
DOIs
StatePublished - May 1 2015

All Science Journal Classification (ASJC) codes

  • Industrial relations
  • Aerospace Engineering
  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)
  • Strategy and Management
  • Industrial and Manufacturing Engineering

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