Tractors on eBay: Differences between Internet and In-Person Auctions

Internet auction platforms are changing the face of transactions in many business sectors, including agriculture. We provide one of the first systematic examinations of the differences between internet and in-person auctions in agricultural input markets. A hedonic model estimated with used tractor transactions from Midwestern sellers pooled between eBay and in-person auctions reveals statistically distinct price surfaces for the two auction venues and predicts significantly lower prices for comparable equipment sold on eBay, though this difference is attenuated for tractors fully covered by eBay's buyer protection program and is fully absent for the most frequently traded tractor. An endogenous venue-selection model reveals that larger, more-valuable tractors are less likely to be offered on eBay, a choice that should enhance seller revenues. Furthermore, sellers in states with more valuable stocks of machinery, more frequent tractor sales, and a lower propensity to use the internet for agricultural marketing are more likely to offer tractors for sale via in-person auctions than on eBay.