Online auctions are enabling the secondary computer market. The immense popularity of eBay allows DellrnFinancial Services to auction $500,000 a month of off-lease computers. Auction participants enjoy a 25%rndiscount when compared to retail prices of similar computers. The activity in this market also provides a test-rnbed for economic theories of auction participation. This research analyzes market-clearing prices for onernconfiguration of used Dell computers in January-February 2002. The results from this research enlightenrnauction participants and researchers as to drivers of dynamic prices. Consistent with theory, the number of PCsrnoffered for sale in an auction lowers seller's revenue. Even within a short period of time prices change.rnImpatient buyers participate actively in initial auctions letting patient buyers enjoy discounts of up to 10%.rnImpatient buyers also exert an externality on other auction participants. They raise prices both for items theyrnwin and for items they bid on and do not win. This leads to high serial correlation in final auction prices. Thernmost surprising result from this research is that prices in the secondary market are increasing over time, asrnopposed to prices for new computers, which continuously decline. As the secondary market evolves and growsrnoff-lease computers will become a viable alternative for price-sensitive consumers. In the future this secondaryrnmarket will have a measurable impact on the sale of new computers. The online auction as an enabler of thisrnmarket will be another example of the disruptive and far-reaching impact of electronic commerce.
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