Optimal fees in internet auctions

Matros, Alexander and Zapechelnyuk, Andriy (2008) Optimal fees in internet auctions. Review of Economic Design, 12 (3). pp. 155-163. ISSN 1434-4750

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Abstract

An auction house runs a second-price auction with a possibility of resale through re-auctions. It collects listing and closing fees from the seller. We find the fees which maximize the revenue of the auction house. In particular, we show that the optimal listing fee is zero. Our findings are consistent with the policies of eBay, Amazon, Yahoo, and other Internet auctions.