Buy It Now: A Hybrid Market Institution

This paper analyzes seller choices and outcomes in approximately 700 Internet auctions of a relatively homogeneous good. The 'Buy it Now' option allows the seller to convert the auction into a posted price market. The authors use a structural model to control for the conduct of the auction as well as product and seller characteristics. In explaining seller choices, they find that the 'Buy it Now' option was used more often by sellers with higher ratings and offering fewer units; and posted prices were more prevalent for used items.