The determinants of sales on eBay: the case of baseball cards

Abstract

The popularity of online auctions has grown immensely with the eBay site being the largest auction site. One issue that has not received sufficient attention in the eBay auction literature is the effect of reserve-prices (or minimum prices) on the probability of a sale. Studies that have included this variable in their empirical specifications include Lucking-Reiley et al. (2000), Eaton (2002) and Jin and Kato (2002). However, all these studies used the book-price itself to determine its effect on auction outcomes. This study used alternative specifications of the reserve-price to determine if there were different effects of this variable on the probability of sale of baseball cards. These alternative specifications combined the reserve-price with the published book-prices for the baseball cards being sold. None of the three specifications of the reserve-price affected the probability of a sale including a binary variable representing reserve to book-price ratios >2.00. The rationale offered for these results is that there is a geographic mismatch when baseball cards are distributed and eBay extends the reach of the card market, which allows collectors to buy desirable cards at a premium.