Reference no: EM133223144

The eBay case focuses on auction markets and contracting. What is eBay's value proposition? eBay has created a market to exchange goods and their value proposition is that people can feel comfortable exchanging those goods for monetary payouts as they transact through eBay. consider reputational concerns eBay needs to focus in on the following three points, in regards to contracting costs, to maintain its market position: (a) make sure that the benefits of cheating are small, (b) have a system that has a high probability to detect cheating, and (c) impose significant penalties if someone is cheating. In general, this case is about creating trust through contracting explain about asymmetric information and using contracts to avoid misrepresentations.