The Impact of Shipping Charges in Online Auctions: Evidence From Electronics Auctions on eBayThe BRC Academy Journal of Business (2010)
AbstractIn October 2008, eBay launched a major campaign aimed at reducing the shipping costs charged by sellers on its Web site. This new policy was a major reversal of the company’s longstanding commitment to allow sellers to set shipping costs, which had been its policy since its founding in September 1995. From an economic perspective, this policy shift is questionable. The eBay marketplace is highly competitive with numerous sellers competing against one another. This competition should drive shipping costs down to their marginal cost levels. The revenue equivalence theorem also suggests that consumers will minimize total costs of purchase and will be indifferent between two identical items if the total cost (price plus shipping costs) is equal. The objective of this research was to empirically test the impact of shipping fees on auction outcomes on eBay. This research is the first direct test of the impact of shipping charges on auction outcomes for both English and fixed price auction formats and for linear and nonlinear shipping schedules. This study is also noteworthy in that it uses by far the largest data set of real auction data ever assembled in examining shipping effects.
Publication DateFebruary, 2010
Citation InformationMikhail I. Melnik and Paul Richardson. "The Impact of Shipping Charges in Online Auctions: Evidence From Electronics Auctions on eBay" The BRC Academy Journal of Business Vol. 1 Iss. 1 (2010)
Available at: http://works.bepress.com/mikhail_melnik/8/