Insights and analyses of online auctions

The Internet-driven networked economy is evolving to the point where firms are beginning to realize the enormous business value possible from a richly connected, global network of consumers and producers. Online auctions, brought about by the synergetic combination of Internet technology and traditional auction mechanisms, represent a significant new dimension of mercantile processes, many of which are not yet fully understood. Using auctions, firms have the opportunity to engage in dynamic and demand-driven production planning and control. Auctions provide information about demand that can in turn influence the nature of the input to be employed to meet the demand. While the majority of the online auction sites started with the objective of clearing aging or perishable inventory, auction-based dynamic pricing has expanded well beyond the realm of collectibles or surplus goods and in fact is a legitimate complement to the conventional notion of posted prices. Most auctioneers prefer to keep low opening bids in order to attract Web traffic, at the risk of selling an item below its cost.