Question

EBay is a secondary market for goods in the same way that the NYSE is a secondary market for stocks. Explain how EBay users helps keep prices efficient for any generic good (if you need a tangible example, how about a Make America Great Again hat?). This mechanism should be analogous to how traders keep prices efficient for stocks. Be detailed in your explanation to walk through the exact mechanism. 

Answer 1

eBay are helping in keeping the prices efficient because they are helping consumers continuously transact with each other and these continuous transaction of them with each other is continuously discovering the prices of these used goods and it is also trying to provide with the incentives to various users about the prices of these commodities after a certain period so that they would be properly analysing the efficiency and the depreciation pricing in the overall pricing of the original product.

it is just like the traders which are always keeping the prices efficient for the stocks because traders are continuously exchanging quotes with each other and they are trying to find out the value of the share continuously so the true worth of the company is analysed and continuous training of these commodities on eBay is related to finding out the continuous price of these companies and this is also reflecting the consequences of large market participants so this is trying to provide with the elimination of the prize discrepancy and it is also providing a transparent mechanism of providing of prices of various commodities so it is enhancing price efficiency in the generic markets.

For example, if you are trying to sell an used iphone 6, it will determine the value of these phones after they have been used for six years and it can be relatively related with someone who is trying to buy a new iPhone 6.