Digital Demand: Demand for Digital Cameras on eBay

The paper estimates the demand for new digital cameras sold in eBay auctions. EBay data seems to offer significant advantages over traditional transactions data for estimating demand for differentiated products. However, there are a number of concerns including censoring bias and the interpretation of the bidding behavior. This paper discusses these problems as well as possible solutions. The paper presents results from three different methods for estimating demand for differentiated products on eBay. The results suggest that the demand for digital cameras is highly elastic and there isn’t a lot of substitution, particularly across brands.