Online Auction Market of Preannounced Product

Abstract

This article examines how an online auction of a preannounced product, the Microsoft Xbox 360, proceeds and performs before its official launch on eBay. Data from the eBay marketplace is examined after the date of the preannouncement in May 2005 until the launch in November 2005. Specifically, the authors look to see if auction success rates from one day affect the success rates on the following day. They also examine if the winning bid prices of one day affect the winning bids on the following day. The results show that auction success rates on one day do not have a significant impact on the following day's success rates. Regarding winning bid prices, there is strong evidence that the winning price series is a nonstationary process, and daily prices show a reverse trending pattern. The authors discuss the managerial implications of their findings.