Comparing revenue from auctions and posted prices

Private‐Value Auction Versus Posted‐Price Selling: An Agent‐Based Model Approach

“…In the posted‐price market when the seller has a constant price signal, the average selling posted price is $100.42 and the probability of an item selling is 72% (Table ). Similar to the PSO results and Hammond (), the probability of the item selling is lower than in the auction scenarios (Table ). Relative to the auction without a reserve price, the seller's expected revenue is higher in the posted‐price market than in the auction without a reserve price (Table ).…”

“…The probability of an item selling is 50%, which is lower than the auction market with a reserve price (Table ). In his experimental study, Hammond () found the posted‐price market has a higher selling price and lower probability of selling the item than the auctions. When the seller's price signal is constant and the seller can impose a reserve price, the private‐value auction is preferred by the seller (Table ).…”

“…Recently, Hammond () sold compact discs in an online ascending‐bid second‐price auction with a reserve price and an online posted‐price market to determine the optimal selling method. Hammond () could not reject revenue equivalence for the auction and posted‐price markets, and found the posted‐price market has a higher selling price and lower probability of selling the item than the auction. While Hammond () did not know the distribution of buyers' valuations of the item being sold, this is a unique paper to the literature because it is empirical instead of theoretical.…”

Mechanism choice and the buy-it-now auction: A structural model of competing buyers and sellers

“…Second, even though the group of sellers as a whole would benefit from the removal of auctions and BIN auctions, individual sellers can still benefit from using them. In fact, Hammond (2010) and Zeithammer and Liu (2006) independently find evidence that sellers' inherent heterogeneity, particularly with respect to inventory, leads them to adopt different sales mechanisms. Therefore, eBay might lose sellers that prefer auctions and BIN auctions if it were restricted to posted prices.…”

Simultaneous use of auctions and posted prices

“…In addition to the above papers, there has also been work that compares the use of auctions with the use of posted prices in a variety of settings (Hammond, 2010(Hammond, , 2013Julien et al, 2002;Kultti, 1999;Wang, 1993Wang, , 1998Vakrat and Seidmann, 1999;van Ryzin and Vulcano, 2004;Vulcano et al, 2002;Zeithammer and Liu, 2008), work on optimal selling mechanisms when buyers arrive dynamically (Board and Skrzypacz, 2014;Vulcano et al, 2002), and work on models of eBay auctions and related markets (Ackerberg et al, 2006;Ambrus et al, 2014;Bajari and Hortaçsu, 2003;Chen et al, 2013;Hidvegi et al, 2006;Peters and Severinov, 2006;Ockenfels and Roth, 2006;Roth and Ockenfels, 2002). Finally, there has also been work on sequential search mechanisms when it is costly for buyers and sellers to interact that illustrates that it can be optimal to first see if there is an agent willing to complete a transaction at a particular price and then complete the transaction with the agent willing to accept the most favorable price possible if no agent accepted the initial offer (Ehrman and Peters, 1994;McAfee and McMillan, 1988).…”