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Determinants of final price in online auction: Evidence in Vietnam

By Nguyen Tri Thong (VNP 22)

Supervisor: Dr. Pham Dinh Long

Abstract:

The strategic behaviors of sellers and buyers to maximize profits, minimize costs and risks in the online auction are important subjects in recent economic research. The aim of this thesis is to study the strategic behavior of the sellers through the presentation of the information of auctioned products and build business reputations to successfully purchase and receive the highest possible price. We employ asymmetric information theory and signaling theory to investigate and explain the factors contributing to final price and the bidders’ strategies in the online auction market. This study uses the smart phones’ auction data in www.handheld.vn, one of the most popular websites in the e-commercial market in Vietnam. We used binary logistic and OLS models to investigate the factors that impact on the probability of successful auctions and the winning/final price such as the seller characteristics, buyer characteristics, auctioned item characteristics, and online auction design by the sellers. The analysis results show that the probability of auction success depends on opening prices, the communication between sellers and buyers, and the sellers’ reputation. The final price was positively related to the opening price, the step-price, buy-it-now price, number of pictures, auction length, number of bids and sellers’ reputation. In contrast, the final price was negatively related only the description length. The study’s results may make recommendations to the sellers in auction designed to attract more participants, increasing the likelihood of success and achieve higher final price.

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