This is the draft of 7 May 2000. One case study is provided by the online auction service, eBay. EBay is exhibit A for those who see the Internet bringing about a frictionless world of efficient markets, and so it makes an especially important study in that mysteriously underinvestigated topic, the market in marketplaces.
Some positive results are available.
I don't quarrel with this. But I want to suggest that eBay's success derives not entirely from its efficiency as a marketplace, but also from the inefficiency of the market in marketplaces. A note on method. Although my arguments are motivated by personal experience with eBay trading, I do not claim that my experiences prove anything. Rather, I will offer a series of six in-principle economic arguments that make the same kind of internal sense as most economic arguments, and I invite others to test or refute them.