Auction hero.

• Author: Peters, Justin

IT WAS THE UGLIEST SUIT I HAD ever bought, and it made me an eBay fan for life. I had been invited to a "color-blind" party and needed to find something appropriate to wear. A quick search of area garage sales and thrift stores had failed to turn up anything suitably gauche, so, as a last resort, I turned to the Internet, pointing my browser toward the then-relatively-new eBay. Within 10 minutes, I had found the object of my desire. Colonel Sanders-white, 100-percent polyester, with flared cuffs and over sized buttons, it was a paragon of sartorial excess--and a bargain at $30. I placed my bid, waited, and three days later received notice that I was the winning (and only) bidder. I looked like a twisted milkman when I wore it, which was to be expected; it was undoubtedly the tackiest suit in the world. And, thanks to eBay, it was all mine.

This was my introduction to eBay, the wildly successful online auction service that gives new meaning to the phrase "one man's trash is another man's treasure." In the market for a talking necktie, a porcelain pig, or a beer helmet? Odds are that a brief search will yield what you're seeking. But far from being limited to tacky kitsch and bizarre curios, eBay also serves as a clearinghouse for a number of useful goods, from computers to automobiles to pressure cookers. Profitable since its inception and boasting more than 42 million registered members, eBay is one of the bona fide New Economy success stories.

Yet, to hear Adam Cohen tell it, Wall Street success was the last thing on Pierre Omidyar's mind when he founded eBay in a spare bedroom in 1995. In his new book, The Perfect Store: Inside eBay, Cohen reports that the online auction service began as an exercise in economic theory, a real-world attempt at forming that most basic of microeconomic precepts, the perfect market.

EBay's unofficial motto could well be "eBay: Eliminating the middleman since 1995," for that has been the crux of Omidyar's perfect market--bringing together individual buyers and sellers on a level playing field where the market perfectly determines an item's price at the intersection of supply and demand. Early on, Omidyar realized that "the Internet was driving down the value of middlemen because it was making it easier--and therefore more economically efficient--for individuals to carry out their own transactions." By providing a setting where buyer and seller could come together in free-market bliss, Omidyar hoped to discover...