Ebay, Online Auctions

Topics: Auction, Auctioneering, EBay Pages: 8 (2510 words) Published: February 21, 2013
Different aspects of online auctions, eBay.

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Maastricht UniversitySchool of Business & Economics|
Place & Date:| Maastricht, 10-12-2012.|
Name, initials:| Elemans, DP|
ID number: | I6049135|
Study| International Business|
Course Code:| EBC1009 |
Group number| 36|
Tutor name:| Nikita Krugljakov|
Writing tutor name:| Gaye van Denderen|
Writing Assignment| Main Paper (Task 10)|
Your UM email address: d.elemans@studentmaastrichtuniversity.nl

Table of contents:

1. Introduction
2. Advantages and disadvantages of online auction
2.1 Advantages
2.2 Disadvantages
3. Different types of auctions
3.1 English auction
3.2 Dutch auction
3.3 First-price sealed bid auction
3.4 Second-price sealed bid auction
4. Different methods of bidding
5. Winner’s curve.
6. Example of bidding, using game theory.
7. Conclusion
8. Reference list
9. List of figures and tables

1. Introduction

The internet itself started in the sixties in the United States. It has had massive growths and has given the population some very useful tools. The most current development is internet auction, also called online auction. Online auction is a service in which auction users or participants sell or bid for products or services via the internet. Sellers put products on the site and following this, buyers can place an offer that they are willing to pay for it. The sellers can then decide to accept this offer or wait for a higher offer to come. eBay is one of the most well known online auctions and therefore the main goal of this paper will be to describe the different aspects of an auction and see how auctions work in real-life situations, all this related to eBay. Firstly, the advantages and disadvantages of online auction will be discussed, relating to eBay. Then the different types of auctions will be explained, giving the that is at work on eBay. Furthermore the methods of bidding will be discussed which will be followed by a real-life example of a bid in an auction, using game theory. Fifthly a review of the literature that is used will be given and finally a conclusion will be stated.

2. Advantages and disadvantages of online auction

2.1 Advantages
There are quite some advantages to the online auction. First of all the huge variety of the online auction, because there are so many sellers there are an enormous amount of products, that you will not find in one store. According to Engelberg and Williams (2006) there were traded goods and services worth more than $44.3 billion on eBay in 2005. Furthermore, the online auction has no limitations, geographically or time wise. You can buy something from somebody in China, while you live in Europe, because the seller will just sent it to you. Furthermore you have no opening hours limitations, because the store is online 24/7.

2.2 Disadvantages
On the contrary you also have disadvantages like fraud, this can happen to the seller but also to the buyer. From the sellers’ perspective, fraud can only occur in the case of money. What could happen is that the buyer sends the money from a hacked account or the buyer states that it did not receive the item. eBay has PayPal as a payment system, this is a system which has various protection programs, one being the Seller Protection, which protects the seller from the problems stated above (paypall.com) The buyer has the same issues according to the payment. The buyer has to trust the seller to send the product, once the buyer sent the money. Moreover the product could be sent damaged or not as the seller told it to be, and then the buyer has already paid the money and most of the time will not get it back. Again, PayPal has a protection...
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