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Article Excerpt
Introduction
The market for individual baseball cards has some unique features. In a sense, the market for individual baseball cards is completely a secondary market because the card manufacturers do not sell individual cards. Baseball cards are sold in "packs" (often 24 packs in a "box" and 12 boxes in a "case"). The most desirable cards are mixed in with "common" cards in packs, and the probabilities of finding various cards are given. Baseball card dealers can buy boxes or cases of cards from the manufacturers (most importantly, Topps, Donruss, and Upper Deck) at a wholesale price, but dealers cannot order individual cards. Dealers obtain individual cards by "breaking" a box, that is, physically opening the packs in a box, by trading for them, or by buying them. Thus many card dealers buy cards as well as sell them, and many collectors sell as well as buy (not to mention the possibility that dealers might collect as well).
A second aspect of the market for baseball cards is what might be thought of as an information problem. In 2003 there were more than forty sets of baseball cards issued by the major manufacturers (e.g. "Upper Deck Victory" or "Fleer Genuine" each with many cards in the set and not uncommonly hundreds of cards in the set). Since the card manufacturers do not sell individual cards, there is nothing like a wholesale price or a manufacturer's suggested retail price. Until the mid-1980s, the large number of cards and the great geographical dispersion in the market make it difficult for buyers or sellers to gather information about the value of any particular card. Thus there emerged in the market price guides which give a "book price" for nearly every card issued by a major manufacturer. Although there are others (e.g. Sports Collectors Digest), the most prominent of these guides are the various Beckett publications, which are updated monthly, quarterly, or yearly.
Perhaps the most recent major change in the baseball card market has been the number of cards bought and sold on eBay, the internet auction site. And eBay auctions provide a natural way to examine the correlations between book prices and the actual selling price of cards sold on eBay. Beckett publishes a "Hi" and a "Lo" price for most baseball cards in mass market magazines and soft cover books. The Lo price is described in the price guide as the "lowest price found after extensive shopping" and the Hi price represents "the full retail selling price." Beckett publications are ubiquitous, available at Borders or Barnes and Noble, and many newsstands. Thus, it is information available to both buyers and sellers of baseball cards.
The first question we investigate in this paper is whether eBay prices seem to track with book prices. There are several reasons to hypothesize a relationship between eBay prices and book prices. First, book prices may be a proxy for subjective values that market participants put on different cards. Second, book prices are a measure of past card prices (both eBay and non-eBay prices) and there might well be a relationship between current and past card prices. Finally, Beckett is known to be used by buyers and sellers in non-eBay markets. Referring to card transactions at a sports card show, Baker and Martin observe that "the Beckett is the price guide used by almost all dealers and card collectors .... Because valuing older cards is difficult, some dealers and patrons will only buy or sell cards at a percent of Beckett" [2000, 183]. It seems reasonable to suppose that some buyers and sellers might transfer behavior from the sports card shows to the internet.
The first result of the paper is that eBay prices and book prices do track together; the second question we explore is which book price, Hi, Lo, or the average of the two, "Avg. HiLo" is the best guide to the eBay selling price. The evidence is mixed between the Lo price and the Avg. HiLo, as will be discussed in the conclusion.
Although online auctions have become very popular with eBay being the largest of the auction sites, there is still a relatively small literature on eBay. eBay has 41.2 million active users with 971 million listings in 2003. In the late 1990's the site was achieving growth rates of 10 percent per month [Lucking-Reiley, 2000] and according to the eBay site, revenues for 2003 were $2.17 billion with net income of $441 million. A number of studies have examined the phenomena of ecommerce in general, with a mention of eBay [Bakos, 2001; Borenstein and Saloner, 2001]. Of those studies that concentrated on the eBay auction site, Lucking-Reiley [2000] summarized basic eBay data such as auction format,...
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