Question

How similar is e-commerce to a perfectly competitive situation? Review the main factors of market structure to the explanation

Answer 1

In order to grasp the similarity between E commerce and utterly Competitive state of affairs, we have a tendency to see the options of individual market structures.

A perfectly competitive market is that the one that has following features:

Many consumers and sellers within the market.
Homogeneous product i.e. every firm marketing same product
Perfect data i.e. each consumers and sellers have complete data regarding the costs prevailing in market.
No group action prices.
Free entry and exit of companies within the market.
E commerce is largely shopping for and marketing of product through electronic means that like mobile apps or web. It includes not simply the Business to client (B2C) however even Business to Business(B2B), on-line ticketing, web banking transactions.

Some basic options of E commerce embrace the following:

Ubiquity i.e. it is accessible all over.
Global reach
Richness i.e. Advertising and stigmatization area unit a vital half.
Information density i.e. reduced data cost; will realize all details on-line.
Universal standards i.e. same standards followed all over.
In the gift era, on-line searching is wide used. completely different E commerce corporations provide varied product. Even the physical stores area unit moving towards e commerce to achieve wider market share.

We can see however excellent competition exists in E commerce by observing the one such case of eBay. it absolutely was established in 1995 as an internet platform adopting price leadership strategy. It will own inventory and also the sellers area unit to blame for shipping the product. Thus, it follows price decrease practices to stay competitive.

Just like in excellent competition, there area unit several consumers and sellers, same is that the case in E commerce. There area unit sizable amount of web sites for on-line searching like Myntra, Jabong; providing same product. we are able to realize the product of same brands on each the sites so another common feature of same product. Also, the consumers and sellers have excellent data regarding all the costs and details of the product. Further, there's free entry and exit of the e commerce sites. we regularly see cases of move down of some on-line searching sites.

Thus, excellent competition is principally a theoretical state of affairs wherever every firm may be a value taker. E commerce is additionally most competitive that it follows the options of excellent competition.