Agent-based Simulation on Competition of e-Auction Marketplaces

In online auction markets, competition exists not only on two sides of a market, i.e. the buyer side and the seller side, but also among auction marketplace operators that provide similar services. Among the factors that determine the result of competition, network effects play an especially prominent role in the participants´ decisions regarding the selection of a market. This paper presents an agent-based simulation model to study the competition of e-auction marketplaces. It focuses particularly on the influence of network externalities on the dynamic evolution of markets. The simulation shows that there exists equilibrium on co-existence in which none participant has motivation to move to another market. Furthermore, both the path to achieve such equilibrium and the market partition at equilibrium need not be unique. The model is also easy to be extended with flexibility for investigation on more complicated scenarios of competing markets