eBay vrs42?

From: Eric Smith <eric_at_brouhaha.com>
Date: Sat Feb 12 13:22:32 2005

Jim wrote:
> Broken down
> 1) two parties can cooporate in order to lower
> the selling price of an item. agreed?
> 2) a lowered selling price deprives the seller
> of revenue. agreed?
         3) the seller has an expectation of a fair play,
> just as buyers have one. agreed?
> 4) therefore, I view it unrighteous to collude
> to lower the price.

You missed several points needed to support your argument.

        2B) the seller is entitled to extra revenue because
            the bidders aren't aware of each other's interests
            or behavior

        3B) fair play requires the bidders to not be aware
             of each others interests or behavior

I don't think eiher of those points are reasonably justifiable,
though.

> How is this different than sellers shilling?

It is vastly different. A bid is supposed to be a binding contract
to purchase the item if the bid amount is the maximum for the auction
(and exceeds the reserve).

If the seller, or any agent of the seller, enters shill bids, they
are fraudulent, because no actual sale will occur if the bid is the
highest.

> In both cases I see it as a circumvention of fair play.

Evidently there's controversy over the definition of "fair". In
a normal auction, there is either one or a relatively small fixed
number of items available. I don't see any reason why some or all
of the bidders discussing the auction amongst themselves, before or
during the bidding, in order to maximize what they perceive to be their
collective gain, is unfair to anyone.

>> What about sniping?
> They do help to lower the average selling price, but it is fair because
> it is within the framework established by Ebay's rules.

If eBay really didn't want bidders to exchange information, they would
have made the rules much more explicit, rather than having a clause
about "price manipulation" that is very open to interpretation. (Any
participation or non-participation in the auction is "price manipulation"
in the sense that you and vrs are using it.)

> Fine. The above point is my rebuttal to Eric's analogy where I claimed
> his example had no bearing on the matter of collusion.

My Ford example was flawed in a sense because it is too dissimilar to
how Ford actually does business. A better analogy would be a sale of
a newly discovered Rembrandt painting. Suppose amongst the bidders
are representitives of two art museums A and B. They each have put
in bids before they each realize the others presence. Then they
decide that rather than engaging in a bidding war, A will drop out.
Possibly they agree that B will lend the painting (if won) to A for an
exhibition. Or possibly not. The exact details of the arrangement
between A and B is irrelevant, as the point is simply that the two
bidders have reached an agreement where one drops out. Note that all
of the bids both A and B placed were entirely legitimate bids that
were intended to be binding. Not a single bid was placed with any
intent to "manipulate the price".

Would you also claim that this is unfair to the seller and the auction
house? This actually is known to happen in the Real World (tm), and
I've never heard anyone there complain that it is unethical, or that
it constitutes "manipulating the price".

I think a big part of the problem with the interpretation of bidder
cooperation as "manipulating the price" is that you're trying to
claim that an action one of the bidders DOES NOT PERFORM is the
one that is unethical. Yet all bids are voluntary; if it were to
be otherwise, something *very* unethical must be going on.

Eric
Received on Sat Feb 12 2005 - 13:22:32 GMT