Posted: June 14th, 2019
Case Study essay
I’m working on a Accounting exercise and need support.
eBay is the largest online auction site. Sellers pay a small fee to list their items in eBay. Items can be sold
at fixed price or auctioned. Generally, auction lasts for several days and the bidders submit electronics bids.
The highest bidder receives an email after the auction closed and get three business days to contact the
seller. eBay provides ratings on buyers and sellers based on positive and negative comments on them. eBay
has created a set up policies to guard against ‘feedback manipulation’ and ‘feedback abuse’. eBay
encouraged buyers to pay through ‘PayPal’ and ‘PayPal’ provides $2000 free insurance in case the buyer
doesn’t received the product or the quality of product is poorer than expected. eBay’s safety staff
investigates alleged misuses at eBay such as fraud, trading offense and illegally listed items. Potential
resolution is banning a seller from future trading on eBay.
Based on the above situation answer the following questions:
1. What potential contracting problems exist on eBay? Explain.
2. What are the contracting costs at eBay? Explain.
3. eBay claims that they have small problems on fraud and misuse of the system. Does this apply that
it is overinvesting in addressing potential contracting problems or underinvesting in addressing
apotential contracting problems? Explain.
Requirements: 600