EBay--Transition From Auctions to Using Posted Prices Research Paper

EBay--Transition From Auctions to Using Posted Prices - Research Paper Example From sellers’ perspective, this preference for posted-price over auctions is endogenous. There is ambiguity over market mechanisms’ behavior; how participants are affected and sales materialize, as the trend of posted-price is initiated by sellers. The reason of this compositional changeover in the products being sold cannot be explained as evolving or causal. Rather profits from auctions started decreasing. Buyers also started showing disinterest in the auction market mechanism besides the shrinking margins of the sellers that prompted a shift to the trend of posted prices. Einav et al. (1) find the reason of reducing margins more important for the changeover in online market design from open auctions to posted price. Although the shift has taken place but still auctions are preferred in certain sales by the online sellers; these are prevalent, as sellers prefer them to posted prices for distinct items sales. The market of eBay connects sellers and buyers on the online platform, presented through its highly interactive website. It is a market with no fixed prices for ever and information is available at just the click of the mouse; both buyers and sellers are bargaining continuously for a better transaction from their own perspectives. eBay is the perfect example of selling goods through auctions, which it has been doing since 2001, propelling its growth through the development of proxy bidding. It facilitates buyers offering a maximum bid while the computer answers to third parties’ bids up to this maximum. This selling design minimizes transaction costs as bidders’ offline or physical presence in actual time is not required for taking part in ever changing market scenario for auction bidding (Einav et al. 1). Figure1 above indicates the past trend till the current scenario, starting from Jan. 2003 till Jan. 2012 of online commerce, which has transformed greatly, but showing a turn against auctions due to reducing revenues since Jan. 2008. As stated