How do you guys think ebay impacts the four basic market structures.?
Answer:
The major market forms are:
A) Perfect competition, in which the market consists of a very large number of firms producing a homogeneous product. Ebay contributes to it and drives prices down.
B) Monopolistic competition, also called competitive market, where there are a large number of independent firms which have a very small proportion of the market share. Ebay helps this by providing another avenue for distribting goods at the lowest market rate for consumers.
C) Oligopoly, in which a market is dominated by a small number of firms which own more than 40% of the market share. Ebay reselelrs of used goods may hurt the magor firms as they tend to offer lower prices.
D) Oligopsony, a market dominated by many sellers and a few buyers. Ebay doesn't really affect, although it makes the number of sellers transparant and allows all to see market prices.
E) Monopoly, where there is only one provider of a product or service. Ebay resellers of used can affect new prices as it is more of a competitive market. Keep in mind thoguh, everything was bought new at the monopoly price so used prices for the goods should be higher on average as well.
F) Natural monopoly, a monopoly in which economies of scale cause efficiency to increase continuously with the size of the firm. Ebay won't have these sellders in the market except as those getting rifd of used and excess inventory.
G) Monopsony, when there is only one buyer in a market. Not realistic for Ebay which is characterized by many sellers and many buyers.
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