Trade-offs associated with including the immediate purchase

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If you sell items on ebay.com, you can conduct a traditional auction that lasts a specified amount of time, and the highest bid at the closing time is the winner. Alternatively, you can post a set purchase price for the item, and any buyer who is willing to pay that price can avoid the auction and purchase the item immediately. In order to attain the highest price from an auctioned item, what should we do? In particular, what are the trade-offs associated with including the immediate purchase option? How should you decide what the immediate purchase price should be for this auction?

Reference no: EM132197854

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