eBay Case Study Analysis

1)Is eBay a perfect example of perfect competition? Support your answer with evidence from the
case?
> No eBay is not a perfect example of perfect competition. Here are the following reasons for above
statement-
1. They produce large number of buyers and sellers which is said to be considered as perfect
competition.
2. There is no homogenous in the products which they are distributing. Each product has its own
variation.
3. There is chargeable transportation cost which does not satisfy perfect competition. 4.There is no
free entry and exit.
5. Supply of good and products are not constant. They are only constant to some extent.
6. Perfect knowledge is not been implemented in case of eBay as many of them depend on previous
sales and carry forward.

2)What factors contradict this example. Explain. Use facts from the case and the YouTube
> The factors contradict this example are:
1. Products do not affect resource allocation; the way products usually do when they are produced to
address the demand.
2. Informational costs are trivial as shipping and handling charges signifying travel costs differ
depending on the good.
3. Products are strictly not homogenous products because at variation in period of use and degree at
wear and tear.
4. Prices do not truly dictate the supply of products.