Old and Current Business Model of eBay

Managerial Finance
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April 27, 2022
Managerial Finance
Part A
There are several types of auctions, the first one being Absolute Auction, Reserve Auction, Minimum Bid Auction, and Sealed Bid Auction. In an Absolute Auction, the highest bidder buys the goods or assets irrespective of price (Hu et al., 2019). Usually, this auction does not require a minimum bid. This ac auction never allows competition of any type by the seller. Also, the seller of the goods is not allowed to withdraw the goods if the auction kicks off.
On the other hand, reserve Auction gives the seller the right to establish a minimum bid. The seller has the right to accept or reject all the bids. In this, the auction becomes without reserve or absolute as soon as the seller determines the price, and the auctioneer is permitted to sell the goods to the highest bidder at the close of the auction.
Minimum Bid Auctions start at a minimum price proven by the seller. Bidding must start at the minimum before making any sale. After that, the auctioneer circulated and publicized the minimum bid at the beginning of bidding on a given asset. The strategy of the Minimum Bid Auction is to help the seller to set the minimum bid, which is low enough to attract buyers because setting a minimum bid too high will disappoint others.
Sealed Bid Auction, in this auction, bidders privately submit their one best offer in writing and in a closed envelope. The bids are opened secretly by the auctioneer and seller, and they do not disclose the bids to anyone. The seller takes one of the following actions. They can accept the maximum bid or reject all bids and request the best bid or the best two of all the bidders or start serious consultations with all the bidders identified.
Part B
eBay is an international online platform where people buy and sell different items. For example, eBay sells cars, electronics, and clothes, among others. eBay is an e-commerce corporation, and through its website, it facilitates consumer-to-consumer and business-to-consumer sales (Bland et al., 2022). Sellers pay a fee for their listings to be made on the website. An additional fee is also charged when the sellers sell their goods. For buyers, it is free to access the website.
Over time eBay has improved. Initially, eBay was using an auction-based model before later adjusting to a fixed-price model. The fixed price model protects the seller’s interests when bids go below the reserve price compared to the auction model, whereby auctioneers determine the floor price and eradicates the maximum price (Brooks, 2019). The fixed price model saves more time than the auction-based model because the prices are fixed, and buyers purchase their products without having to wait until the highest bidder is determined, as practiced in the auction-based model (Afuah, 2014). The fixed price model is easier than the auction-based model. This is because all prices of products are already set, and it is just a matter of purchasing compared to the auction-based, which is complicated because buyers have to wait until the highest bid is made to determine the price of the asset.
Part C
eBay has ...