Social and Behavioral Sciences Commons^™

Ebay Or Amazon? Time-Sensitive Retail Purchases Via Auctions, Brennan C. Platt

Faculty Publications

We consider a population of buyers who have unit demand for a homogeneous good, and only differ in terms of how soon they need to purchase it. These buyers have access to a stochastic stream of second-price auctions, as well as a retail outlet that can be used at any time. We characterize the equilibrium bidding dynamics, showing that bidders steadily raise their reservation price as they approach their deadline. This market produces a considerable degree of dispersion in auction revenue. Surprisingly, extending the buyers' deadlines actually increases expected revenue and the fraction of buyers using the retail outlet.