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Two Market Experiment: Fixed Price vs. Auction

Two Market Experiment: Fixed Price vs. Auction. Justin Oplinger Max Newton . Questions. How do the prices react between the two different markets? (fixed price and auction) Why do sellers and buyers choose to participate in auctions when they can just buy the same item at a fixed price? .

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Two Market Experiment: Fixed Price vs. Auction

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  1. Two Market Experiment: Fixed Price vs. Auction Justin Oplinger Max Newton

  2. Questions • How do the prices react between the two different markets? (fixed price and auction) • Why do sellers and buyers choose to participate in auctions when they can just buy the same item at a fixed price?

  3. Of the 8 sellers … • 2 remained in the Fixed Price market throughout all periods • 3 tested out the Auction market in period 1 and switched to the Fixed Price for the remaining periods • 1 sold in the Auction market a majority of the periods (3 out of 5)

  4. Total Fixed Price Volume Buyers Sellers

  5. Fixed Price Sales Price Period

  6. Auction Sales

  7. Total Sales

  8. Profits for Buyers

  9. Profits for Sellers

  10. Analysis • ｷTransaction prices in the auction were really low at first, but reacted quickly to settle at a price just below 200. The fixed price market reacted a little slower, never really having enough time to settle at a price but continually and slowly rising towards 190. • ｷThe fixed price market prices had smaller distribution over time though, showing that prices were converging. • ｷAuction market was more driven by consumers setting the price during auctions, while the fixed price market was driven by suppliers as they set prices between periods. • ｷLooking at results, there isn’t a reason to buy or sell in an auction because the profits aren’t as desirable. So there must be external reasons for entering an auction like time, demand, availability, and type of product.

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