eBay, the online auction company, has an impressive portfolio of cooperative agreements. This portfolio includes an agreement with the U.S. Postal Service to facilitate the shipping of goods purchased through eBay auctions, an agreement to allow MBNA to use eBay's name on a credit card, and an agreement in an online auction company in Korea that is supplemented with an investment by eBay in the Korean partner. In addition, at one time eBay had formed an independent firm, called eBay Australia and New Zealand, with an Australian company known as ecorp.
-If eBay entered into the cooperative agreement 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

The scenario described in the question is best explained by the concept of real options, which refers to the ability of a company to delay making a significant investment until there is more certainty and clarity about the potential success of the investment. By testing the Australian and New Zealand markets through a cooperative agreement with ecorp, eBay was creating an option to expand its business in these markets if the results were positive. This approach is consistent with the real options framework, which emphasizes the value of flexibility and the ability to wait for new information before committing to a major investment. The other options listed (transaction cost economics, tacit collusion, explicit collusion) do not seem relevant to the scenario described in the question.

EBay, the Online Auction Company, Has an Impressive Portfolio of Cooperative