New Buyers’ Arrival under Dynamic Pricing Market Microstructure: The Case of Group-Buying Discounts on the Internet.

Dynamic pricing mechanisms occur on the Internet when buyers and sellers negotiate the final transaction price for the exchange of goods or services. These mechanisms are used in online auctions (e.g., eBay.com, uBid.com) and name-your-own-price (Priceline.com) formats, for example. The current rese...

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Main Authors: KAUFFMAN, Robert John, Wang, B.
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Language:English
Published: Institutional Knowledge at Singapore Management University 2001
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Online Access:https://ink.library.smu.edu.sg/sis_research/2780
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spelling sg-smu-ink.sis_research-37802015-11-12T06:48:07Z New Buyers’ Arrival under Dynamic Pricing Market Microstructure: The Case of Group-Buying Discounts on the Internet. KAUFFMAN, Robert John Wang, B. Dynamic pricing mechanisms occur on the Internet when buyers and sellers negotiate the final transaction price for the exchange of goods or services. These mechanisms are used in online auctions (e.g., eBay.com, uBid.com) and name-your-own-price (Priceline.com) formats, for example. The current research studies the dynamics of one instance of dynamic pricing - group-buying discounts - used by MobShop.com, whose products' selling prices drop as more buyers place their orders. We collect and analyze changes in the number of orders for MobShop-listed products over various periods of time, using an econometric model that reflects our understanding of bidder behavior in the presence of dynamic pricing and different levels of bidder participation. We find that the number of existing orders has a significant positive effect on new orders placed during each three-hour period, indicating the presence of a positive participation externality effect. We also find evidence for expectations of falling prices, a price drop effect. This occurs when the number of orders approaches the next price drop level and the price level for transacting will fall in the near future. The results also reveal a significantending effect, as more orders were placed during the last three-hour period of the auction cycles. We also assess the efficacy of group-buying business models to shed light on the recent failures of many group-buying Web sites. 2001-10-01T07:00:00Z text https://ink.library.smu.edu.sg/sis_research/2780 info:doi/10.1080/07421222.2001.11045687 Research Collection School Of Computing and Information Systems eng Institutional Knowledge at Singapore Management University Management Information Systems
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Management Information Systems
spellingShingle Management Information Systems
KAUFFMAN, Robert John
Wang, B.
New Buyers’ Arrival under Dynamic Pricing Market Microstructure: The Case of Group-Buying Discounts on the Internet.
description Dynamic pricing mechanisms occur on the Internet when buyers and sellers negotiate the final transaction price for the exchange of goods or services. These mechanisms are used in online auctions (e.g., eBay.com, uBid.com) and name-your-own-price (Priceline.com) formats, for example. The current research studies the dynamics of one instance of dynamic pricing - group-buying discounts - used by MobShop.com, whose products' selling prices drop as more buyers place their orders. We collect and analyze changes in the number of orders for MobShop-listed products over various periods of time, using an econometric model that reflects our understanding of bidder behavior in the presence of dynamic pricing and different levels of bidder participation. We find that the number of existing orders has a significant positive effect on new orders placed during each three-hour period, indicating the presence of a positive participation externality effect. We also find evidence for expectations of falling prices, a price drop effect. This occurs when the number of orders approaches the next price drop level and the price level for transacting will fall in the near future. The results also reveal a significantending effect, as more orders were placed during the last three-hour period of the auction cycles. We also assess the efficacy of group-buying business models to shed light on the recent failures of many group-buying Web sites.
format text
author KAUFFMAN, Robert John
Wang, B.
author_facet KAUFFMAN, Robert John
Wang, B.
author_sort KAUFFMAN, Robert John
title New Buyers’ Arrival under Dynamic Pricing Market Microstructure: The Case of Group-Buying Discounts on the Internet.
title_short New Buyers’ Arrival under Dynamic Pricing Market Microstructure: The Case of Group-Buying Discounts on the Internet.
title_full New Buyers’ Arrival under Dynamic Pricing Market Microstructure: The Case of Group-Buying Discounts on the Internet.
title_fullStr New Buyers’ Arrival under Dynamic Pricing Market Microstructure: The Case of Group-Buying Discounts on the Internet.
title_full_unstemmed New Buyers’ Arrival under Dynamic Pricing Market Microstructure: The Case of Group-Buying Discounts on the Internet.
title_sort new buyers’ arrival under dynamic pricing market microstructure: the case of group-buying discounts on the internet.
publisher Institutional Knowledge at Singapore Management University
publishDate 2001
url https://ink.library.smu.edu.sg/sis_research/2780
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