An empirical analysis of the main drivers affecting the buyer surplus in E-auctions

Abstract

We empirically examine the impacts of the product category, the auction format, the 2008 global financial crisis, the group purchasing, the contract type, the platform ownership, and the number of participating suppliers on the buyer surplus obtained from e-auctions. To this end, we collect a unique dataset from a purchasing organisation that offers e-auction solutions to its corporate customers. By using a standard Tobit model, we show that the product categories, the auction type, and the number of participating suppliers have significant effects on the decrease in the procurement prices with respect to the minimum of the initial submitted bids. It is observed that the 2008 global financial crisis led to an increase in the buyer surplus. We classify the product categories into three groups based on their impacts on the average of the decrease in the procurement prices. We show that the average decrease in procurement prices is higher for the group purchasing option than for the individual buying option. It is concluded that the types of contract between buyers and auctioneer and the platform ownership have no statistically significant effects on the average decrease in procurement prices.