EBay: Towards A Perfectly Competitive Market

Abstract

The purpose of this paper is to explain how factors in eBay create an increasingly efficient marketplace that drives it towards the conditions of a perfectly competitive market. Search and evaluation features that increase the efficiency of consumer decision making are examined and discussed in the context of information economics and market efficiency. The increased problem solving capability of consumers enabled by features in eBay show that it is moving towards a perfectly competitive marketplace. The continuous advancement of technology will further improve such market efficiencies and drive toward a perfect Internet marketplace. EBay’s ‘near perfect’ market conditions creates challenging conditions such as lowly dispersed and market driven prices, wide consumer choice, and consequently diminished advertising efforts. This implies challenges mainly in the areas of differentiation and positioning strategies by businesses to mitigate the effects of eBay’s continuing shift towards perfectly competitive market conditions. It is important for businesses that are used to operating in the conditions of monopolistic competition associated with traditional market efficiencies to strategize for the upcoming challenges of near perfect market conditions facilitated by efficient market platforms such as eBay.