Question

Why is eBay *not * exactly perfect competition?

In other words, for what reasons is eBay not exactly "perfect competition"? Thank you!

Answer 1

There are many eBay features that make the market competitive-and maybe similar to the ideal competition model.

Lot of buyers thousands of people have access to items listed on eBay. Smaller numbers of buyers would mean lower prices for me the seller if I sold it in conventional means.
Many sellers are free to access eBay, too.
Perfect Information. Searching for iPads that are sold is easy.
Entrance free. Anyone can get in.

Given eBay 's success, it may be surprising that there are no more eBay rivals. EBay takes a pretty good price commission and this is a very profitable business. However, since they have such strong brand loyalty, entering in and taking their market share is very difficult for any other company. Even if a company offered half of eBay's commission rate, most people would prefer to stick with eBay because they have the largest market share of customers, so despite the relatively high commission rates you get more from eBay.

Perhaps the closest rival is Amazon marketplace. Amazon should take advantage of its market dominance and technology to encourage people to sell products online. It tends to attract more business and fewer private individuals – so a degree of differentiation is present. It is a good example of how technology has improved the competitiveness of certain markets. But, there are also other aspects that indicate a strong monopoly power. Technology can work both ways.