But other Internet heavyweights are hard at work trying to break off some of the market for themselves. Yahoo, the most visited site on the Web, introduced its own auctions last year. Industrial players are also getting in on the online-auction craze, driving down the cost of equipment by bidding to buy it directly from suppliers. Global auctions are the kind of ideal market Adam Smith could only have dreamed of. And buyers are assured the price isn't too high because they get to choose the lowest one being offered by any seller in the world.
Location becomes unimportant.
Every time a conventional online retailer adds a new user, it's just one more person who can buy its products. But every time eBay adds a new user, he can buy from or sell to any of the 7.7 million people already on the network. A retailer, in other words, is one to many, while eBay is many to many. Online auctions have their limits. Auctions are most useful for setting the price of goods of indeterminate value.