Internet auctions can be ended in different ways. EBay auctions, for example, end at a predetermined time while Amazon auctions do not. The auctions at Amazon are extended by ten minutes if a bid is submitted within the last ten minutes of an auction. EBay’s hard closing rule induces bidding strategies that can produce inefficient results. Nevertheless, a hard close ending rule is more efficient than the automatic extension rule used by Amazon. EBay’s hard closing rule can be modified to resemble a Vickrey second-price auction. The modifications would make auctions on eBay more efficient.
Major Themes in Economics
©2004 by Major Themes in Economics
"Ending an Internet Auction: Is eBay's Approach Optimal?,"
Major Themes in Economics, 6, 37-48.
Available at: https://scholarworks.uni.edu/mtie/vol6/iss1/5