How different are consumers in Internet auction markets? Evidence from Japan and Taiwan

- We examine consumers' behavior in two different Internet auction markets.
- We use Heckman's two-step estimation to eliminate sample selection problem.
- We find that returns to seller reputation are rewarded.
- Japanese consumers react more to the shipping and handling cost and a bonus offer.
- Taiwanese buyers bid higher if more pictures of the items are posted online.

This study provides evidence of consumers' different attitudes toward asymmetric information in different Internet auction markets, using data of the iPod nano MP3 player from Yahoo! Japan Auctions and Yahoo! Kimo. The estimation results indicate that while non-positive reputation has a negative strong effect on new iPod nanos, but not for their used ones in Japan, seller reputation has a positive and significant effect on used iPod nanos, but little impact on new ones in Taiwan. In addition, auctions including shipping and handling charges significantly lower sale probability and increase auction prices in Japan, but this is not the case for Taiwan.