Also, fraudulent sellers and buyers can be banned.
What are the contracting costs at eBay?
A eBay must maintain the site and provide insurance and monitor complaints, feedback on the forums, and also the types of items that are sold.
A eBay claims that it has only a small problem with fraud and misuse of the system. Does this imply that it is over-investing in addressing potential contracting problems? Under-investing? Explain.
Over-investing? Not at all. Since eBay profits every time someone becomes a member, it is in eBay's interest to create a reputation that the...
Without this security, buyers would sell their goods personally online. The benefit conveyed by eBay, besides additional 'hits' from buyers, for sellers, is that it offers some security and insurance to all of the involved parties in a sale. However, there are limits to how much eBay can police the site, and to include more controls might be prohibitively costly to the website owners -- for buyers and sellers that are leery, they can always seek out other options. eBay has stricken the right balance between over and under-investing in its security controls, hence its financial and popular success.
