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I think you're reading way too much into it. I'm basically speaking from personal, anecdotal experience selling (and buying) a few low-end cars via Craigslist
by kbutler 8y ago
I think you're reading way too much into it.
I'm basically speaking from personal, anecdotal experience selling (and buying) a few low-end cars via Craigslist and equivalents.
I have other things I'd rather do with my time than either handle a bunch of prospective buyers inspecting, test driving, and low-balling my car (and dealing with potential fraud), or myself inspecting, test-driving, and low-balling other people's cars, even though that may be a way to save/earn some money.
From an economics point of view, the transaction costs are significant (even if not dollar-denominated), so the arbitrage opportunity exists for someone who can minimize or simply disregard those costs.
- ouid 8y agojust because associated costs exist doesn't mean that they are reflected in the offered price. In order for that to be the case you would have to make a zero arbitrage argument, which doesn't apply to markets where sellers simply sell to the first buyer offer.
- kbutler 8y agoI'm not sure why you keep bringing up selling to the first offer and zero arbitrage. goatherders and I both described working with multiple buyers, and that finding the right buyer (that is, the one who will pay you $1,000 more than some other buyer) requires time and effort. When considering whether to accept an offer on the table or hold out for a better offer, the seller implicitly or explicitly considers the transaction costs (search, delay, processing, risk, privacy, etc.). This implies non-zero arbitrage, multiple offers, and market inefficiency.