Instructions:
Please, read the case below and respond to the situation/question using concepts from Chapter 10 (See screenshots below). This assignment should be around 500 words including only the answers. I have added Chapter 10 to use for text citation and concepts. Please, one or two citations from chapter 10.
Professor’s instructions: Prior to your analysis, you should provide a
ief summary of the case, a paragraph or so in your own words with in text citations. You then can choose to answer the questions in paragraph form or type the question and then answer it. Either way is fine, but I do require that your answers have in text citations to support what you are saying. Some of the questions are your opinion, but you should also support that with concepts from the text. Format should be APA.
Citation will be:
Brickley, J., Smith, C., & Zimmerman, J. (2016). Managerial economics and organizational architecture (6th ed.). New York: McGraw-Hill Education.
ANALYZING MANAGERIAL DECISIONS: eBay.com*
eBay operates the world’s largest online auction. In early 2008, eBay operated in 39 counties with 276 million registered users worldwide. The total value of all successfully closed items in 2007 was $59 billion with an average of $2,039 worth of goods trading on the site every second. Sellers pay a small fee to eBay to list their items. They provide a description of the item, photographs, the minimum acceptable bid, accepted forms of payment, and other relevant information. Items can be sold at a fixed price or through an auction. In an auction, bidders submit electronic bids over the Internet. After the auction closes (auctions usually last several days), the high bidder receives an e-mail. The high bidder must con- tact the seller within three business days to claim the item and a
ange payment and delivery. eBay pro- vides other support services:
The Feedback Forum is a place where eBay users leave comments about each other’s buying and selling experiences. If you are a bidder, you can check the seller’s Feedback Profile easily before you place a bid to learn about the other buyers’ experience. If you’re a seller, you can do the same thing to check out buyers. Each participant is given a Feedback Score based on the number of positive and negative ratings that they have received. Participants with sufficient positive ratings are flagged by colored stars. The highest rating is the “Red shooting star.” eBay has created a set of policies to guard against “feedback manipulation” and “feedback abuse.”
eBay users are encouraged to settle transactions through PayPal. PayPal provides free insurance of up to $2,000 on some items to protect buyers in cases where they do not receive the item or it was less than expected.
Participants sign user agreements that specify the trading rules and expectations. eBay’s safety staff investigates alleged misuses at eBay such as fraud, trading offenses, and illegally listed items. Potential resolutions include such things as banning a person from future trading on eBay.
1. How does eBay create value?
2. What potential contracting problems exist on eBay?
3. How does eBay address these problems?
4. What are the contracting costs at eBay?
5. eBay claims that it has only a small problem with fraud and misuse of the system. Does this imply that it is overinvesting in addressing potential contracting problems? Underinvesting? Explain.
Chapter 10: