3 ms·

Why do you think density isn’t going to reduce prices? Doesn’t density equal more supply in the supply/demand curve?

by jmpman 7y ago

jelliclesfarm 7y ago
yes, it will increase supply, but it won’t bring down prices. I literally don’t know one example in any overcrowded high density city that has affordable housing. Not in the whole world. The demand spurs more building and there will never be any surplus stock that will devalue existing housing or bring down prices. Let’s take tomatoes. Case 1. I grow 10 kilos of tomatoes for market from my 100 sq.ft vegetable plot. I sell it for $1/lb and make $10. The next year, I grow tomatoes on steroid fertilizers and get 20lbs from same plot. I sell it for $1/lb but my neighbour is also at the market and same customers don’t want as much from me. I end up selling at 0.50/lb to get rid of all my stock. Because. Glut. More supply = lower prices. Case 2. I take 10lbs of tomatoes to market. I make a deal with t the manager that only I can sell tomatoes and I don’t want any other competitors. I promise that I can bring double the amount of tomatoes, but the manager must advertise for me. If he fulfills the lack of competition and advertises for me, I will give him 1/4 of my proceeds. He agrees. He does a great job of advertising. First he lets everyone know that there will be no more tomatoes. Then he tells the customers that every other market is selling bad tomatoes and that his tomatoes are the very best. But too bad..it’s very Rare. There is literally no soil that can grow the kind of tomatoes that his market can bring. But best to wait..he will try to grab as many tomatoes as he can..but he can’t promise. The other market manager is threatening him. Then other customers come by and take him aside.. pssstt, they say..I hear you have the best tomatoes and when they come..can you set aside some for us. Shoo away the old customers..we can pay double. The market manager isn’t sure, but promises to try. But for his trouble, can he get a finders’ fee? Sure..the wealthy shoppers agree to the deal. So I bring 20 kgs of tomatoes to the market. The manager gets his cut. The old customers are shoo’ed away. New ones pay more to buy all. Manager makes bank. Only one who profits for nothing. It behooves him to keep increasing the prices and making my tomatoes more and more scarce. It profits me to grow mediocre tomatoes but increase volume. Maybe I can sell the squished ones..maybe I can paint eggplants red and sell them as tomatoes. Who cares..the crowd will buy 50 kilos if I can provide the tomatoes and I can even charge $5/kg. Why on earth would I sell it for less? Even more importantly, why would I sell for less than the $1/kg that originally got for my tomatoes when there are suckers waiting to pay five times more because of their branding? Case 2 isn’t about tomatoes. Here ends the stories.

Why do you think density isn’t going to reduce prices? Doesn’t density equal more supply in the supply/demand curve?

by jmpman 7y ago

Why do you think density isn’t going to reduce prices? Doesn’t density equal more supply in the supply/demand curve?

yes, it will increase supply, but it won’t bring down prices. I literally don’t know one example in any overcrowded high density city that has affordable housing. Not in the whole world. The demand spurs more building and there will never be any surplus stock that will devalue existing housing or bring down prices. Let’s take tomatoes. Case 1. I grow 10 kilos of tomatoes for market from my 100 sq.ft vegetable plot. I sell it for $1/lb and make $10. The next year, I grow tomatoes on steroid fertilizers and get 20lbs from same plot. I sell it for $1/lb but my neighbour is also at the market and same customers don’t want as much from me. I end up selling at 0.50/lb to get rid of all my stock. Because. Glut. More supply = lower prices. Case 2. I take 10lbs of tomatoes to market. I make a deal with t the manager that only I can sell tomatoes and I don’t want any other competitors. I promise that I can bring double the amount of tomatoes, but the manager must advertise for me. If he fulfills the lack of competition and advertises for me, I will give him 1/4 of my proceeds. He agrees. He does a great job of advertising. First he lets everyone know that there will be no more tomatoes. Then he tells the customers that every other market is selling bad tomatoes and that his tomatoes are the very best. But too bad..it’s very Rare. There is literally no soil that can grow the kind of tomatoes that his market can bring. But best to wait..he will try to grab as many tomatoes as he can..but he can’t promise. The other market manager is threatening him. Then other customers come by and take him aside.. pssstt, they say..I hear you have the best tomatoes and when they come..can you set aside some for us. Shoo away the old customers..we can pay double. The market manager isn’t sure, but promises to try. But for his trouble, can he get a finders’ fee? Sure..the wealthy shoppers agree to the deal. So I bring 20 kgs of tomatoes to the market. The manager gets his cut. The old customers are shoo’ed away. New ones pay more to buy all. Manager makes bank. Only one who profits for nothing. It behooves him to keep increasing the prices and making my tomatoes more and more scarce. It profits me to grow mediocre tomatoes but increase volume. Maybe I can sell the squished ones..maybe I can paint eggplants red and sell them as tomatoes. Who cares..the crowd will buy 50 kilos if I can provide the tomatoes and I can even charge $5/kg. Why on earth would I sell it for less? Even more importantly, why would I sell for less than the $1/kg that originally got for my tomatoes when there are suckers waiting to pay five times more because of their branding? Case 2 isn’t about tomatoes. Here ends the stories.