Perfect Competition Ebay

Perfect Competition under eBay: A Fact or a Factoid?

Ref. No.: ME0017

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Perfect Competition under eBay:

A Fact or a Factoid?

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The online auction giant eBay is an American website, headquartered in San Jose, California. It is

the world’s online marketplace facilitating large-scale trade of varied items ranging from cars, real

estate to collectibles, clothing, DVDs, and artwork. eBay was founded in September 1995 by Pierre

Omidyar (Pierre), a software developer. Earlier, he had worked in Claris, a spin-off of the famed

Apple Computers. eBay started in lines of something like a garage sale and the first product that it

sold was a broken laser pointer. Pierre knew that he had created something big, when the broken

laser pointer sold for $14.83.1 When the winning bidder was contacted to check if he understood that

the laser pointer was broken, the buyer replied that he was a collector of broken laser pointers!

Pierre, a French-born Iranian-American, acknowledged that he alone cannot put eBay into the

corporate big leagues. In 1996, Jeffrey Skoll, with a MBA from Stanford, was hired. Soon in 1998,

Meg Whitman (Meg), a Harvard Business School graduate, followed as the president and CEO. Meg

had learned the crucial importance of branding from her enriched association with Hasbro, a worldwide

leader in children’s and family leisure time products and services. She took the company public

(Exhibit I), expanded it and successfully exceeded earnings predictions.

1

“Our History”, http://news.ebay.com/history.cfm,1995

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This case study was written by Nitu Gupta under the guidance of Akshaya Kumar Jena, IBSCDC. It is intended to be used as the

basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was

compiled from published sources.

© 2009, IBSCDC.

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