Social buying: the effects of group size and communication on countering seller market power

Authors:
Alexander Pelaez;Karl R. Lang;Yuecheng Yu
Affiliations:
City University of New York, New York, NY;City University of New York, New York, NY;City University of New York, New York, NY
Venue:
Proceedings of the 14th Annual International Conference on Electronic Commerce
Year:
2012

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Abstract

This article examines the impact of group size and communication level on market performance in group buying auction sites. Drawing on theory from economics and information systems we posit that larger buyer groups should be able to obtain better prices from sellers and that more communication support should help buyers with coordinating their actions. Using an economic experiment, we found, interestingly, that offering a private communication channel for buyers does not increase the efficiency of group coordination, and also lower buyer profits. Group size did not have significant effects on buyer profits, but slows down group coordination. We discuss the implications of these results.