This paper has provided the first related pieces of evidence in the literature that together lend strong support to competing auctions theory. First, in the presence of competing auctions, bidders use a very different strategy than they would with independent auctions. Bidders tend to bid across competing auctions and bid on the auction with the lowest standing bid. We further demonstrate that when homogenous auctions end at almost the same time, more bidders are likely to bid across competing auctions than when auctions end at different times. We also find that winners who bid across competing auctions pay a lower price than those winners who do not bid across competing auctions. Therefore, since there are many homogenous auctions competing against each other in on-line auctions, it is inappropriate to consider on-line auctions as independent, ignoring the existence of other competing auctions.
In this paper, we do not consider whether the auction prices are uniform with the existence of competing auctions. According to the theory, competing auctions tend to make prices more uniform. We will study such price effect of the existence of competing auction on eBay in a separate paper. In the current paper, we also take the behavior of sellers as exogenous. It will be interesting to see what the equilibrium behavior of sellers is given the existence of competing auctions. This will be especially useful for those sellers who want to sell many identical items one by one in a short time.
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