4 ms·

Empirically, prices are set by the seller.

• pjlegato 6y ago
  The seller can _ask_ for any price they like, not unilaterally "set" it. They're only going to get that, and thus set the price, if there is also a buyer who agrees to pay that price. In technical terms, I was using "set the price" to mean "discover the the market-clearing price that allows a transaction to happen."
  • monadic2 6y ago
    Right, but this attitude allows neglecting any behavior that results in bad resource distribution as inevitable and immutable. That's not how economies work by all observation. Empirically supply/demand is insufficient to explain all the market behavior that's trivially observable, especially when you can easily manipulate both sides of that narrative with enough capital. The labor theory of value certainly has issues but at the very least I would expect a critique to provide an alternative narrative of observable pricing pressures, such as scarcity and market controls. This type of reductive thinking doesn't have a clear end to my eyes.
• ric2b 6y ago
  Sure, but the seller is not guaranteed to get sales. So there must be an agreement between the seller and the buyer on what the item is worth, and "worth" includes what alternatives both of them have available as well.