If eBay entered the cooperative with its Australian partner for the purpose of testing the attractiveness of the Australian and New Zealand auction industries prior to making a more significant investment in these industries,this would be an example of

Question

Quizplus · Accepted Answer

Real options involve investing in small experimental projects in order to test the waters before making a larger investment. In this case, eBay is testing the waters in the Australian and New Zealand auction industries by partnering with a local company. This is a common strategy in real options. A and B are not correct because transaction cost economics refers to the costs associated with conducting transactions and tacit collusion refers to a type of collusion where competitors coordinate their actions without explicitly communicating. C is not correct because explicit collusion involves competitors actively conspiring to manipulate a market, which is not the case here.

If EBay Entered the Cooperative with Its Australian Partner for the Purpose