Assignment on Analysis of the Popular Online Auction Sites

RUNNING HEAD: ANALYSIS OF THE POPULAR ONLINE AUCTION SITES
Popular Auction Sites
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RUNNING HEAD: ANALYSIS OF THE POPULAR ONLINE AUCTION SITES
Abstract
Online auctions have become popular over the years with millions of potential buyers and
sellers interacting in an online marketplace. This paper analyzes the popular auction sites by
providing the similarities and differences between eBay and other online auction sites. eBay is
the largest online site providing services with existence in the market for more than 10 years. An
auction is a marker where competitive prices are designed by monopoly sites. Price is the major
factor considered in an online auction. This study discovered that there are no registration fees
when selling items on both eBay and Yahoo. The second price, the first bid is an auction where
bidders submit bids on a paper different from the first price as the highest bidder pays an amount
than that paid by the second-highest bidder. eBay, Amazon, and Yahoo are similar in this case as
the sellers submit their first reservation amount and the bid increases subsequently above the
highest bid submitted earlier. When finalizing an auction, eBay and Amazon differ as eBay uses
the concept of hard to close to support last-minute bidding while auction operations in Amazon
use similar rules and can be delayed if there is a need. The idea of the Game theory is used by
eBay, Amazon, and Yahoo to determine bid prices and end time. Thus, the findings of this paper
will help buyers and sellers choose the best online auction to choose from.
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RUNNING HEAD: ANALYSIS OF THE POPULAR ONLINE AUCTION SITES
Introduction
Web-based auctions have become the most universal instruments for electronic
commerce. Most people have become attracted to online auction and e-commerce due to the
increasing demand for custom-made products and the commercial contrast of shopping. Online
auctions are important in enhancing the interactions of outcomes not possible in physical
auctions (Choudhary & Shivendu, 2017). This behavior has been intensified by the increase in
the number of people accounting to more than 50% in the US as per the end of 2019. In 2016, the
worldwide number of people using electronic devices was 63% and in 2018, people using
smartphones in the United States had reached 78%. According to a report by Global Digital,
4.4M people are active internet users using mobile gadgets causing a larger percentage of
internet traffic (Terence, Brian, Spaid, Wood, & Sulin, 2018). Therefore, this paper uses the
materials provided to provide the analysis, comparison, and contrast of the online auctions and
eBay concerning the various economic concepts.
Background
eBay is the largest online auction site that provides a wide interaction stage for many
items. eBay is a developed online auction enabling people from different places globally can
interact with each other through buying and selling different items (Terence, Brian, Spaid,
Wood, & Sulin, 2018).The website allows different people to buy and sell to be brought together
to look, buy and sell different items. This auction is what is referred to as the English auction and
it is popularly known as “an ascending sequential bid auction” (eBay, 2013). In this case, bidders
observe what other people bid for and make the decision of whether to increase the bid or not. In
this auction, the product is normally sold to the highest bidder. According to the report by the US
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RUNNING HEAD: ANALYSIS OF THE POPULAR ONLINE AUCTION SITES
Census Bureau (2018, Q1), eBay has increased its users to more than 220M in 2016 which has
provided a 23% rate of growth in the US.
An online auction is a service in which buyers and sellers bid for their items. Although
Amazon is not as big as eBay, it is among the major online auction sites(Terence, Brian, Spaid,
Wood, & Sulin, 2018).The site has exploded over the years from being a bookstore to a most
trusted online auction.
Yahoo is an online auction site that maintains auction services and a market share of
below 3%. The site is an active player in the online auction with a range of items and users. Like
both eBay and Amazon, Yahoo brings together online auctioneers to trade various products
(Einav, Theresa, Jonathan, and Neel, 2015). The online auction platform has become very
competitive as in Japan and Yahoo had overcome eBay in 2002 (Einav, Theresa, Jonathan, and
Neel, 2015). The difference between Yahoo, Amazon, and eBay arises from different economic
questions such as the equilibrium behavior.
Results
Price Restrictions and Market Equilibrium
Online auction sites are two markets involving two types of users benefiting from
interactions on the same platform. According to Terence, Brian, Spaid, Wood, and Sulin (2018),
the auction is a competing market where their price structures are designed by competitive and
monopoly platforms to involve all market sides. This explains the concept of price restrictions in
economics. Both sites compete for an exclusive association with the user as the market affects
the price competitiveness of the site in the market (Alvin & Ockenfels, 2017). The sites compete
for the loyalty of users through the mobility of their online services.
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