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For an idea of how this business goes on an average day. https://www.npr.org/sections/money/2017/07/26/539552579/episode-629-buy-low-sell-prime https://www.npr

For an idea of how this business goes on an average day. https://www.npr.org/sections/money/2017/07/26/539552579/episode-629-buy-low-sell-prime https://www.npr.org/sections/money/2017/07/26/539552579/epis...

RcouF1uZ4gsC 8y ago
From the article: > It defies something called the law of one price. That economic principle says that the same item should sell for pretty much the same amount of money everywhere it's available. > Today on the show: We meet the modern middleman and we find out how he makes money doing something that should be economically impossible. This is a very deliberately sensational way of looking at it. One of the big reasons the one price law works is because there are people who do arbitrage. The first comers to an arbitrage opportunity make a lot of money. Other people come in and try to undercut the first comers and so they make less money and so on. In the long term basically the arbitrage profit tends towards zero.
- zeroname 8y ago
  Exactly. The existence of arbitrage doesn't "defy" the law of one price, it is its entire foundation. What a bold display of economic illiteracy. Next up: English major at NPR discovers the economic secret to free lunch.
- DubiousPusher 8y ago
  I think the point is more that it's strange that these giant retailers who've gotten to where they are because they are basically experts at selling goods retail are creating these arbitrage opportunities and largely ignoring them. Intuitively, what you'd expect is for the retailers to find a way to close the arbitrage gap. But in the U.S. we have this kind of strange notion of retailers setting prices based on guidance from the wholesaler or producer and then not allowing any price negotiation. These retailers are used to a world in which realizing the resulting arbitrage was not worth anyone's time or money but the internet has changed that and they haven't adapted.
  - noir_lord 8y ago
    My partner makes 'spare' money arbitraging between TK Maxx and ebay in the UK, she follows all the big fashion vloggers on youtube then buys the stuff she thinks will sell based on spotting trends across them, she frequently makes 100% margin and averages >50% (across everything). She does it because it's fun and she's bored but so far she's really damn good at it. I find it funny that someone with an advanced degree in finance spends her spare time doing that but it's a hobby and she makes more than I do playing Chess (which is zero) so I can't laugh.

RcouF1uZ4gsC 8y ago

From the article: > It defies something called the law of one price. That economic principle says that the same item should sell for pretty much the same amount of money everywhere it's available. > Today on the show: We meet the modern middleman and we find out how he makes money doing something that should be economically impossible. This is a very deliberately sensational way of looking at it. One of the big reasons the one price law works is because there are people who do arbitrage. The first comers to an arbitrage opportunity make a lot of money. Other people come in and try to undercut the first comers and so they make less money and so on. In the long term basically the arbitrage profit tends towards zero.

zeroname 8y ago
Exactly. The existence of arbitrage doesn't "defy" the law of one price, it is its entire foundation. What a bold display of economic illiteracy. Next up: English major at NPR discovers the economic secret to free lunch.
DubiousPusher 8y ago
I think the point is more that it's strange that these giant retailers who've gotten to where they are because they are basically experts at selling goods retail are creating these arbitrage opportunities and largely ignoring them. Intuitively, what you'd expect is for the retailers to find a way to close the arbitrage gap. But in the U.S. we have this kind of strange notion of retailers setting prices based on guidance from the wholesaler or producer and then not allowing any price negotiation. These retailers are used to a world in which realizing the resulting arbitrage was not worth anyone's time or money but the internet has changed that and they haven't adapted.
- noir_lord 8y ago
  My partner makes 'spare' money arbitraging between TK Maxx and ebay in the UK, she follows all the big fashion vloggers on youtube then buys the stuff she thinks will sell based on spotting trends across them, she frequently makes 100% margin and averages >50% (across everything). She does it because it's fun and she's bored but so far she's really damn good at it. I find it funny that someone with an advanced degree in finance spends her spare time doing that but it's a hobby and she makes more than I do playing Chess (which is zero) so I can't laugh.