Question

1. What kind of business structure(s) (Perfect Competition, Monopoly, Monopolistic Competition, or Oligopoly) would you classify eBay as?
2. Why?

Answer 1

eBay can be classified as an example of perfect competition. eBay is a platform which makes available a large number of buyers because the products available on eBay are available at prices which are better than the prices in traditional and other online stores. There is no entry restriction to sellers, henve anyone can sell anything, which provides large number of buyers and sellers. Generally the transactions carried out by the individual buyer and seller are small which creates a situation of price takers. There is a limit on the user for listing the product so there are lesser chances of monopoly arising. There is a free and easy exit and entry of business in eBay. The products are categorised and sub categorised into sub categorised as homogenous products therefore competitive advertising does not exist.