SHERP

The Role of the Buyout Price in the Internet Auction

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Authors
Jung, Hoon; Kim, Byungdo
Issue Date
2004
Publisher
College of Business Administration (경영대학)
Citation
Seoul Journal of Business Volume 10(2):17~26(2004)
Keywords
Internet auctions; Buyout price; Maximum acceptable bid level; Auction formats
Abstract
We consider an Internet auction with the “buyout price” as an
optional feature. Under IID assumption and risk-neutral buyers, we
show that the expected revenue to the seller from the Internet auction
with the buyout price is larger than the expected revenue from the
Internet auction without the buyout price. Moreover, given the uniform
distribution for reservation values, the revenue gain of employing the
buyout price option is getting smaller as the number of potential buyers
becomes larger.
ISSN
1226-9816
Language
English
URI
http://hdl.handle.net/10371/1807
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College of Business Administration/Business School (경영대학/대학원)Dept. of Business Administration (경영학과)Seoul Journal of BusinessSeoul Journal of Business Volume 10, Number 1/2 (2004)
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