Online Auctions: There Can Be Only One

—In recent years, the proliferation of the world wide web has lead to an increase in the number of public auctions on the internet. One of the characteristics of online auctions is that a successful implementation requires a high volume of buyers and sellers at its website. Consequently, auction sites which have a high volume of traffic have an advantage over those in which the volume is limited. This results in even greater polarization of buyers and sellers towards a particular site. This is often referred to as the “network effect” in a variety of web and telecommunication applications involving interactions among a large number of entities. While this effect has qualitatively been known to increase the value of the overall network, its effect has never been modeled or studied rigorously. In this paper, we construct a Markov Model to analyze the network effect in the case of web auctions. We show that the network effect is very powerful for the case of web auctions and can re...

• Type: Conference
• Year: 2009
• Where: WECWIS
• Authors: Charu C. Aggarwal, Philip S. Yu
• Keywords: Auction, Business, Network Effect, Web Auction, WECWIS 2009