ECO 550 Strayer University Auctions and Dynamic Pricing Case Study

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Xvzoer17

Economics

ECO 550

Strayer University

Description

Case Study 1: Auctions and Dynamic Pricing

The following video describes auctions as price discovery mechanisms:

Use the video on auctions and at least three academic or high-quality business publications (see acceptable types below) to answer the following questions in 5–7 pages. Other articles and resources can be found at the Strayer Library.

  • There are many types of auctions, each with strengths and weakness at uncovering the real price or value of an item. Compare and contrast how each of the following uncovers value:
    • English and Dutch auctions.
    • Sealed-bid first-price auctions and Vickery auctions.
  • Compare and contrast surge pricing and congestion pricing. Give an example of each currently in use.
  • Auctions are widely used in finance, e-commerce, and in e-games. Identify three examples of auctions used in finance, e-commerce, and/or e-games. Explain the following in-depth:
    • The need for an auction to uncover value in the product or service.
    • How the type of auction used to uncover the value of the product or service is better at uncovering value than other types of auctions.
  • Auctions are also widely used to generate revenue for not-for-profit organizations. What are the advantages or disadvantages of auctions as revenue generators for not-for-profit organizations?
  • Suggest ways in which a for-profit company, such as the company for which you work or a company for which you aspire to work, can use auctions or dynamic pricing to better uncover value and increase revenue.

Formatting Requirements

This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.

Acceptable Types of Publications

A high-quality, professional business publication is one that is primarily directed at reporting or analyzing the workings of business. Examples are the Wall Street Journal, Bloomberg, and Reuters. Avoid general news publications such as USA Today, the Washington Post, and the New York Times.

Please do not rely on Wikipedia, Investopedia, or similar websites as references at any time in this course.

User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Attached.

Running Head: AUCTIONS AND DYNAMIC PRICING

Auctions and Dynamic Pricing
Student’s Name
Institution Affiliation

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AUCTIONS AND DYNAMIC PRICING

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Auctions and Dynamic Pricing
Auction is a strategy that organizations and sellers use to determine the price of an item. Notably,
scholars define auctions as the process of buying and selling commodities by offering them to
the market for a bid, receiving the bid from prospective buyers and then selling the item to the
highest bidder or buying the commodity from the lowest seller. People have used the method for
decades to determine the prices of rare products. The auction theory which analyzes the
behaviour of the players in an auction market categorizes auctions as games which have
incomplete information since, in many of the auctions, one party holds more information about
the product than the other. Nevertheless, there are different types of auctions such as Dutch
auctions, English auctions and sealed-bid auctions, among others.
English and Dutch Auctions
A Dutch auction is a public offering auction structure in which the players lower the cost of an
item until it gets a bid. The first bid that a buyer makes becomes the winning bid. For instance,
the price begins of a painting may start at one million dollars, a price that none of the buyers is
willing to pay. Therefore, the auctioneer begins reducing the price of the product until the first
bidder makes a bid. The bid becomes the winning bid. Notably, no bidder sees the bids of the
other players. The Dutch auction strategy favours the buyers, especially in the stock exchange
market. Since the method minimizes the offering and the actual listing prices, investors take
advantage of the difference and purchase shares at a discount and then sell them after the listing
of the shares leading to massive profits.

AUCTIONS AND DYNAMIC PRICING

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On the other hand, an English auction utilizes a...


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