Perfect Competition Under eBay

PERFECT COMPETITIONUNDER

WHAT IS MARKET?

MonopolyDuopolyOligopolyMonopolistic competitionPerfect competition

TYPES OF MARKET

Market structure where competition among sellers and buyers prevails in its most perfect form.

PERFECT COMPETITION

Large number of sellers and buyers

Price taking Product homogeneity Free entry and exit

F E AT U R E S

Perfect KnowledgePerfect mobility of factors of production

No transport costNo intervention by the governmentRational behaviorSingle price

A S S U M P T I O N S

DETERMINATION OF EQUILIBRIUM PRICE AND EQUILIBRIUM QUANTITY

UNDER PERFECT COMPETITION

DETERMINATION OF EQUILIBRIUM PRICE-

Under perfect competition, equilibrium price is determined by the forces of :

1. Market demand2. Market supply

TABLE : PRICE DETERMINATION UNDER PERFECT COMPETITION

Price (Rs) Market Demand

Units

Market SupplyUnits

Pressure on Price

5 10 50 D ‹ S

4 20 40 D ‹ S

3 30 30 D = S

2 40 20 D › S

1 50 10 D › S

Fig . 1

THREE BASIC ASSUMPTIONS…

Price and Quantity supplied are positively related or that supply curve of a commodity slopes upwards from left to right.

Price and Quantity demanded are negatively related, or that demand curve of a commodity slopes downward from left to right.

Forces of supply and demand operate freely without any government intervention.

What happens when price becomes higher or lower then the Equilibrium Price ?

IMPORTANT OBSERVATIONS.

Price under perfect competition is determined by the industry, not by an individual fi rm.

Price under perfect competition is known as equilibrium price because it corresponds to equilibrium of the industry.

An individual fi rm under perfect competition cannot change the equilibrium price.

CONTI…

Excess demand occurs when, corresponding to the existing price, demand for commodity is greater than its supply (D › S).

Excess supply occurs when, corresponding to the existing price, supply of a commodity is greater than its demand (S › D).

Online marketplace Large scale trade of varied items

3 segments -market places - payments - communicationsSource of revenue

SAY HELLO TO EBAY

Market places

-Commerce platform

Payments -Pay pal

CommunicationsSkype

Bill Me Later

BUSINESS SEGMENTS

Traditional auction style formatFixed price i.e. buy it now

CONTI..

Products on the web site are available at prices better than those one can find in traditional or online stores. i.e. large buyers

Anyone can sell nearly anything i.e. large sellersTransaction by individual buyer and seller is very

small therefore they are price takers.Limit to each user for listing the product so no

chance of monopoly No possibility of economies of scale

WHY EBAY PERFECT COMPETITION

Competitive advertising does not occur because the products are categorized and sub- categorized into homogeneous products.

Entry and exit as a business in eBay is quite easy.

No browsing cost for buyers and the eBay fee schedule identical selling costs for all the sellers.

Rational behavior and the part of sellers and buyers ,eg: play station 3.

CONTI…..

SAURABH SINGHH

CURRENT STATUS

eBay is a place to buy ,sell and window shop.

The products on the website have prices better than traditional or other online stores.

Individual seller ,small retailer or big company all are sellers and can sell nearly anything by listing their items on eBay.

Huge variety of things are available with enormous details

E-BAY AND PERFECT COMPETITION

Buyers and sellers both are price takers.Only 10 simultaneous listing for identical good is allowed ,so no possibility of economies of scale.

Competitive advertising does not occur as products are categorized and sub categorized into homogeneous ones.

Entry and exit as a business on eBay is very easy.

Several sellers of common products and several buyers are features of eBay.

CONTI…

EASY AVALIBILITY - Whatever you want to buy, whether its large or small, cheap or expensive, everyday or just plain weird, the chances are you can find it on eBay.

AN online marketplace where you can buy things from all over the world, without leaving your home. You can get things that you would never think anyone would bother to sell, and you can get them cheaply. The powerful search engine means that you can find things you will like without even knowing exactly what you are looking for.

BUYERS ADVANTANGE OF EBAY

Money can be send quickly and electronically to almost all of these sellers, without worrying about currency conversion or exchange rates or anything else.

For bargains, eBay is an ideal place to buy.

CONTI...

WHY A SELLER WANT’S TO SELL THROUGH INTERNET.?

Time eff eciencyCost eff encyEff ective supply chain managementEff ective communication and flow of information.

HOW TO SELL THROUGH EBAY?

Create a seller’s accountPrepare your itemList the item for saleTrack your listingReceive payment and complete the sale.

SHIVAM

ABHISHEK TIWARIANKITA CHHEDAAKSHAY MALLKINJAL THAKKARRAHUL JHARUBY GABRASAGAR TUNIYASAURABH SINGHSHASHIKANT MISHRASHIVAM TRIVEDISWATI DESHMUKHVIDHA SHARMA

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