CAREER: Economic Analysis of Online Mercantile Processes

This Faculty Early Career Development (CAREER) grant will investigate business-to-consumer (B2C) online auction mechanisms that are being engineered by online merchants. Auctions were traditionally used for selling single items with a wide dispersion in valuations among buyers. However, electronic markets have enabled a new economic environment where commodities are now bought and sold using a wide array of mercantile processes that include a variety of auction mechanisms. The goal of this research is to study this new market environment from both consumers' and sellers' perspectives. Typically, on-line auctions require sellers to choose from various parameters. Given the characteristics of the product and the consumer population that will be attracted to these auctions, each auction can be designed to maximize the revenue generated from that auction. On the other hand, consumers can choose certain strategies to maximize the chances that they purchase products at the lowest possible prices. The study will develop analytical models of various types of online auctions, both for sellers and consumers. The analytical results will be validated by experimental studies. The results of the study will be used in undergraduate and graduate management classes to enhance students' understanding of incentives of various agents in the economic environment. The results will also be made available to scientific community through publications in refereed journals and conferences.