Seller Search and Market Outcomes in Online Auctions

Authors:
Jason Kuruzovich;Siva Viswanathan;Ritu Agarwal
Affiliations:
Lally School of Management and Technology, Rensselaer Polytechnic Institute, Troy, New York 12180;Robert H. Smith School of Business, University of Maryland, College Park, Maryland 20742;Robert H. Smith School of Business, University of Maryland, College Park, Maryland 20742
Venue:
Management Science
Year:
2010

Citing 17
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Abstract

It has become widely accepted that information technology (IT) has had a profound influence on market transactions, with lower search costs for buyers often considered the key to lower prices and higher consumer welfare. However, sellers also use online channels to search for buyers whose product preferences and valuations match the sellers' offerings, and limited research has examined the impact of IT on sellers' search strategies or associated market outcomes. In this study, we investigate how market characteristics, the length of time the seller searches the auction marketplace for a buyer, and seller search in other websites influence the final sale price in online auctions. The online auction market for used vehicles provides a valuable opportunity to observe search processes of sellers, as the unique vehicle identification number associated with each vehicle enables the tracking of an individual item across both subsequent auctions and across other websites. We find that the market characteristics, duration of search, and search in other websites are each associated with a higher final sale price. Our findings highlight the importance of examining both buyer and seller search behaviors to further our understanding of the impacts of IT on market outcomes and efficiency.