THE CHOICE OF OPENING PRICES ON EBAY

In this paper we examine the choice of the opening bid on eBay by sellers of US Morgan dollar coins. We find that the opening bid is a function of the observed characteristics of the past transaction prices for the coin, the seller's characteristics and the fee structure imposed by the auctioneer. The results demonstrate that increasing the opening bid fee structure induces a lower optimal opening bid, while an increase in the degree of risk in the price distribution increases the opening bid. These results have important implications for market structure of online auction sites. Copyright © 2009 The Authors. Journal compilation © 2009 Blackwell Publishing Ltd and The University of Manchester.