auction - Auction Market mechanism by which buyers make...

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Auction Market mechanism by which buyers make bids and sellers place offers; characterized by the competitive and dynamic nature by which the final price is reached 1
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Auctions Online auction sites among the most popular consumer-to-consumer sites on the Internet eBay: market leader Several hundred different auction sites in U.S. alone Established portals and online retail sites increasingly are adding auctions to their sites Most widely known auctions are consumer-to- consumer (C2C) auctions in which auction house is simply an intermediary market maker 2
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Types of Pricing Dynamic pricing The price of the product varies, depending directly on the demand characteristics of the customer and the supply situation of the seller Fixed pricing One price, everywhere, for everyone Trigger pricing Adjust price based on location of the consumer Utilization pricing Adjust price based on utilization of the product Personalization pricing Adjust price based on the merchant's estimate of how much the customer truly values the product 3
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Benefits of Auctions Liquidity Price discovery Price transparency Market efficiency Lower transaction costs Consumer aggregation Network effects 4
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Risks and Costs of Auctions for Consumers Delayed consumption costs Monitoring costs Possible solutions include: Fixed pricing Watch lists Proxy bidding Equipment costs Trust risks Possible solution—rating systems (not always successful) Fulfillment costs 5
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Risks and Costs of Auctions for Merchants Selling price below conventional markets
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This note was uploaded on 01/28/2011 for the course IELM 120 taught by Professor Fu,qi during the Spring '09 term at HKUST.

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auction - Auction Market mechanism by which buyers make...

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