Online Auctions of New Product Before and After Its Official Launch: Differences, Time Series Linkage, and Correlation with Stock Market

Abstract

This study investigates the online auction market of Xbox 360 consoles before and after its official launch. Among nine measures of online auctions, all except for one are significantly differed between online auctions before and after the official launch. The principal component analysis further visualizes the differences. By using auto-regression to analyze the relationship among success count, success rate, and winning price in time series, we find that success count and success rate can be predicted with its own past values in (t-1) and (t-2) periods. The winning price can be predicted with its own past value in (t-1) period. We find that the preannouncement and launch events do affect the stock price, trading volume, daily price range, price change, and market volatility. We also investigate the correlation coefficients between the online auction market and the stock market. We find various significant correlation coefficients among the measures of both markets in the concurrent and one-time lag scenarios. The managerial implications of the findings are also discussed.