Are prices inflated in markets that operate on websites such as eBay?

Okay, so I have been browsing eBay as people say you can always pick up bargains…..however in many cases I have to agree. I feel that prices are very much inflated on sites such as these and that buying them elsewhere is often cheaper. It got me thinking why this is….is it because eBay takes a percentage of the sellers profit and therefore the seller charges more to cover this cost, or it is because people think that they are always guaranteed a bargain so they keep on bidding and become somewhat oblivious to the actual market price of this good and often pay well over this equilibrium price?

What are your thoughts?

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One Response to “Are prices inflated in markets that operate on websites such as eBay?”

  1. Bert Doerhoff, CPA says:

    There are most likely several factors at work here. Yes, eBay has a certain amount of overhead associated with it, but so does an business. The "it must be a bargain" phenomenon can be seen on eBay, and at Wal-Mart and many other "discounters". The one thing that contributes to overpriced items on eBay, that can’t be ignored is the auction phenomenon. People get carried away bidding on an item, then before they know it, its no longer about getting a good price, its about beating the other bidders. Human nature at its finest!

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