The Effect of Posted Prices on Auction Prices: An Empirical Investigation of a Multichannel B2B Market

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Publication History

Received: May 14, 2021
Revised: April 8, 2022; November 18, 2022
Accepted: December 16, 2022
Published Online as Articles in Advance: November 30, 2023
Published Online in Issue: December 1, 2023

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Although multichannel sales strategies have become common due to the use of advanced information technologies, how one trading mechanism can influence the outcome of another, especially in the B2B market, remains largely underexplored. This paper investigates the effect of price and quantity information from an online posted-price presales channel on the performance of the century-old sequential Dutch auction system. Sellers can control the price paid and make a proportion of their stock available in auction presales. Anything left after presales is sold via auctions. Our analysis of nearly 1.5 million flower lots reveals a positive effect with higher auction prices and total revenue for lots listed in presales than for lots that are not. The result holds even for lots with no actual sales in the presales, indicating that buyers pay close attention to the additional information from the posted-price presales channel. By teasing out the information effect of presales prices and presales quantity on auction prices, we evaluate a number of pricing strategies. The results suggest that selling at a high price in presales is still more beneficial than selling more by discounting prices.

Additional Details
Author May Truong, Alok Gupta, Wolfgang Ketter, and Eric van Heck
Year 2023
Volume 47
Issue 4
Keywords Auctions, E-commerce, information signal, multichannel, sequential B2B auctions, information revelation, posted price
Page Numbers 1557-1584
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