4/10/2005

E-bay

Has anyone tried to buy something on E-bay and noticed that the item you want is always being sold by the same person? That is to say, the seller is making it or providing the selling item. People bid it way up because they think that it is the only one of its sort. Then, the next week, it is back and the beginning bid is $5. It is like the Dutch auction discussed in class and there is no consumer surplus left because it all goes to the seller.

3 comments:

C-Dizzle said...

Not only have I noticed it but I've been the one selling in such a manner. Through some good luck, I came upon a certain quantity of a good that I could sell at a much larger price on E-Bay. I got onto E-Bay and watched bids for a few weeks on similar items and found a low number of interested buyers looking at each item listed. I realized that if I sold all of the items at once, they would be distributed widely among the few buyers driving the buying price down. So, I decided to sell my items one at a time for a few weeks. This was definitely the way to go because my selling cost was driven up and competition was temporarily driven up for my items because of the apparent scarce resource. Needless to say, I made good money off of this selling technique.

heather said...

Way to go MEG! I'm a seller on Ebay, and it always drives me crazy to watch other seller's list their items so haphazardly. The thing I am most conscious of as a seller is being able to maintain demand and not to disturb the demand so it is always in my favor. Viva producer surplus!

Dr. Tufte said...

-1 on Mack's post for no link.

LOL. I think Meg and Jacques have learned something in their ManEc class.

Alternatively, remember how I said at several points earlier in the semester that economics is about trying to figure out why some unusual and seemingly sub-optimal and irrational behavior is in fact optimal and rational? This is a perfect example. Meg, Jacques, and to an extent Mack were able to figure this out. Meg and Jacques were actually able to put words on why this worked.