While I think my question is straight forward, I'm guessing the answer to it is anything but. Thanks in advance for any insight you may be able to offer, even if it's just a directional assist. Here's the question.
- What is the impact on total revenue when eBay has 1 additional seller join its ecosystem with X dollars in product inventory? How does this differ in the short vs. long term?
Acknowledgements, thoughts, and considerations:
- The type of product the seller carries, number of bidders (buyers), and their respective bidder budgets all certainly play a factor in calculating the additional sellers impact on revenue. Feel free to consider the question with the seller selling "average" product, constant bidder budgets, and number of bidders before and after the seller joins. In short, please feel free to simplify these (and any other) assumptions.
- Seasonality should play a factor in the short term. If the seller were to join in December, the impact would be different than if that same seller with the same X dollars in product joins in May. In the long term, this shouldn't matter.
- Playing with some supply and demand curves on paper tells me that the steepness/slope of the curves has a dramatic impact on the expected total revenue when multiplying P2 and Q2. The revenue could be incremental to the existing revenue, decrease it, or keep it flat depending on these slopes.
Again, any light you can shine on the above would be greatly appreciated. In case you're up for it, please find a final follow-up question below.
- Say the X dollars in product inventory were 5% of the total pre-existing available eBay inventory. If we increase X to represent 10% of total pre-existing available eBay inventory, how would that change its impact on total revenue?