Worldwide auction leader eBay started operations in Japan just five months after Yahoo! launched its Japanese auction service. But eBay was never able to mount a credible threat and ended up pulling out of the market. This example shows that:
A) online auction markets are characterized by constant shifts in market dominance.
B) market dominance in the global marketplace translates to an equivalent position in national markets.
C) national markets tend to be influenced by factors that are not necessarily localized.
D) it's imperative to move first in markets influenced by network effects.
E) firms should always subsidize initial adoption of their products and make them cheaper than their competitor's products.

Question

Quizplus · Accepted Answer

The example of eBay's failure to establish itself in Japan against Yahoo! highlights the importance of being the first mover in markets where network effects are significant. Network effects mean that the value of a service increases as more people use it, which can create a significant advantage for companies that enter the market early.

Worldwide Auction Leader EBay Started Operations in Japan Just Five