Case Study EC APPLICATION: HOW THE COMMONWEALTH OF PENNSYLVANIA SELLS SURPLUS EQUIPMENT For many years, the Pennsylvania Department of Transportation (DOT) used a traditional offline auction process. Beginning in October 2003, the state held online auctions to sell its surplus heavy equipment. At his fifth monthly radio address, Pennsylvania then- Governor Ed Rendell stated, "The old, live-in-person auction system generated about $5 million a year. Using the Internet, we're on pace for a 20% revenue increase. The initial online sale of surplus DOT items consisted of 77 items (including 37 dump trucks). On-site inspection was available twice during the 2-week bidding period. The online sale allowed the Commonwealth of Pennsylvania to obtain an average price increase of 20%, while reducing labor costs related to holding a traditional on-site sale. On high-value specialty items (ie, a bridge inspection crane and a satellite van), results exceeded the estimated sale prices by over 200%. The auction was conducted by Asset Auctions. The results of the auction were as follow: Total sales: $635,416.03. Half of the bidding activity occurred in the final 2 days. Every lot received multiple bids. Overtime bidding occurred in 39 lots. 174 bidders from 19 states and Mexico made about 1,500 bids in 5 days. . 47 different buyers participated. The Commonwealth of Pennsylvania now sells surplus equipment and properties using both Asset Auctions Online and eBay. Many other states and city governments use auctions to sell their surplus equipment. in 2006, Governor Rendell went a step further and signed into law legislation that would permit the use of electronic and reverse auction bidding in the local governments. Questions 1. What are the major EC activities of the auction? 2. Using the classification of EC, how would you classify the online auction? 3. What is the distribution model of the auction, and debate how the company could use social network to improve its online auction