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A pricing model for group-buying auction based on customers' waiting-time

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Abstract

Group-buying auction is a new business model in e-commerce. This auction has its own characteristics that make it distinct from other types of auctions. Customers' waiting time is an inherent attribute for group-buying auction. However, this attribute is rarely considered in the previous pricing models. Therefore, finding an appropriate pricing model for it seems to be of great importance. In this paper, with the help of game-theory concepts and according to each customer's waiting time in group-buying auction, a pricing model for a duopolistic market is proposed which takes into account both customers' and sellers' satisfaction. The pricing model shows that customers' awareness of Internet group-buying auction is so important and if it is lower than a boundary value, then the group-buying seller could not compete in the market. The model emphasizes on economies of scale as a significant factor in the success of the auction. The model also stresses the importance of gaining customers with lower product value in the group-buying auction.

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Notes

  1. The P 1 + B.T g amount is the maximum amount of P 1 + B.T w for all customers. Considering this boundary amount, we can be assured of the purchasing of all the customers, even if the group-buying auction fails to reach to the second price

  2. Pricing models have implemented with MATLAB. Numerical examples are also added to appendix section, which is available from the authors.

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Authors and Affiliations

  1. Sheldon B. Lubar School of Business, University of Wisconsin-Milwaukee, Milwaukee, WI, USA

    Mahyar Sharif Vaghefi

  2. School of Management and Economics, Sharif University, Tehran, Iran

    Mahrad Sharif Vaghefi

  3. Department of Engineering and Mathematical Science, University of Wisconsin-Milwaukee, Milwaukee, WI, USA

    Neshat Beheshti

Authors
  1. Mahyar Sharif Vaghefi
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  2. Mahrad Sharif Vaghefi
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  3. Neshat Beheshti
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Correspondence to Mahyar Sharif Vaghefi.

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Sharif Vaghefi, M., Sharif Vaghefi, M. & Beheshti, N. A pricing model for group-buying auction based on customers' waiting-time. Mark Lett 25, 425–434 (2014). https://doi.org/10.1007/s11002-013-9262-1

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  • DOI: https://doi.org/10.1007/s11002-013-9262-1

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