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Second-chance offers

By J. Garratt and Thomas Tröger


We study the second-price offer feature of eBay auctions in which the seller has multiple units. Perhaps surprisingly, the opportunity to make second-chance offers can reduce seller profit. This happens if her marginal cost function is sufficiently steep. Hence, sellers should be wary about the possibility that buyers anticipate second-chance offers, and it may be advantageous for a seller to acquire a reputation for not making second-chance offers. (JEL D44, D82

Topics: Second-price auction, second-chance offer, eBay, optimal auction
Year: 2013
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