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Technology Stocks : eBay - Superb Internet Business Model

EBAY 85.36

+1.1%

Dec 12 3:59 PM EST

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To: T. Pascal who wrote (4172)	7/20/1999 10:46:00 PM
From: mrknowitall	Read Replies (1) of 7772

T. - in your example you're making the assumption that your shill bidder somehow knows the proxy bid amount of the "opponent." Since serious bidding usually occurs in the last minutes - even minute or seconds - it is extremely difficult to "inflate" the bid by running it up to (but not far over) someone's unknown proxy. You'd simply run out of time to execute the bids. And, if you stab at it with a huge bid and end up winning, you and your compatriot have just cost yourselve(s) the listing fee and the commission. As a relatively frequent buyer on ebay, I don't bid on things that I don't already know the relative value of. This is where, IMO, in the majority of ebay auctions, the value of a given item is really whatever the community of bidders is willing to pay. Shill bidding - and yes, it does happen, is probably a tiny fraction of the transactions that take place. You're making the assumption that buyers are simple rubes in an auction environment. Sorry - not everyone is that easily duped. If it was as pervasive as you would have everyone believe, ebay would have died off long ago. I'm not at all concerned with the internet auction business model as it is being conducted on ebay - that is well proven to be viable. As for the stock price, I'm still waiting for reality to set in on the valuation - the most recent announcements about technical and redundancy improvements to the site are encouraging, but I don't see getting into ebay in a big way until they prove they can handle more business than they are currently handling. The new players on the technical level are good signs. Mr. K.

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