The Design of Online Auctions: Business Issues and Current Research

The Internet has made auctions a common and integral part of the way commerce is conducted today. In both the consumer and business markets the applicability of auction-based trading mechanisms has been expanded by the computational power and flexibility the Internet makes available. There is currently multi-billion dollar annual activity in the online auction market with a growing variety of sophisticated trading mechanisms. The broader range of applications for auctions and implementation choices means that there is a need for more scientific research on online auctions that can be used to optimize their design. In this paper we seek to characterize the current state of management science research on online auctions, present some new empirical research results, and develop a broad research agenda around many open business issues. We find that the research in this area is still at an early stage and there remain many opportunities to do interesting applied and theoretical work spanning the disciplines of management science, economics, and information systems. Such work will better inform managers about the proper design and use of online auctions.

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