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> In a free market of rational economic actors Not sure what rationality has to do with this. It is about personal utility which is subjective and at time irra

> In a free market of rational economic actors Not sure what rationality has to do with this. It is about personal utility which is subjective and at time irrational. > liquidity ... time horizon Not sure how is this related? Liquidity in itself is an asset, if you have readily available money vs oney on paper that a big difference, always was and always will be. But how is this related? > ...limited number of actors... IMO, there are always so many alternatives, (e.g. moving to a different city, living in suburbs) it is hard to image uncompetitive real estate market, even if all the land in a city was in a private hands of a single "actor" it would still be very competitive market overall. But that's hardly a case, indeed even if the land is in hands of two actors it's enough for a competition here. Or do you suggest there is a cartel? In that case it's a legal issue of failed police force not a free market failure unless you privatize police as well.

lumost 5y ago
Liquidity matters in free markets as it effects the ability of buyers to buy and sellers to sell. In Urban housing markets many individuals do not have the liquidity to buy even if they have the cash flow. The number of actors matter as moving to different cities typically means changing jobs which may or may not be viable, if alternative cities have the same pricing dynamics at play - then it may not be possible to find a better alternative in price. As to the reason why this all matters and we aren't content with simply choosing to rent from REIT A or REIT B is that zoning boards have proven unable to cut through A & B's protests against new construction. While A&B may compete with each other they do not compete with any alternative, and all potential customers must acquire housing. As long as the total number of housing units remains below the demand for housing then A&B will benefit. In practice there are still a number of players who interact with the zoning board - but the net result is still a frustratingly stagnant housing supply.
- sgregnt 5y ago
  IMO, this is still a free market modulo the part with the city planning which is not about voluntary exchange of services or goods but a coertion by law. The definition of free market is so much broader than the peculiarities you've mentioned. Couldn't there be a free market before the fiat money existed? In any case, in my original post I was talking about forces of free market, these forces might exist in partially free market where many things are not a free choice but consequence of one or the other type of social coercion. Free market force: all it means is that the specific exchange between the parties was done voluntarily as a manifestation of the parties preferences in face of all other alternatives they have. In this sense the parties came to a conclusion that this action maximizes their utility. I'm not arguing that free market forces are better than the alternative (you need to define what you mean by better), just saying in terms of resources allocation, free market forces maximize utility in face of other alternatives. You can argue that this is a prisoner dilemma situation etc... but that's a fallacy as well IMO (can discuss this if more details are desired)

lumost 5y ago

Liquidity matters in free markets as it effects the ability of buyers to buy and sellers to sell. In Urban housing markets many individuals do not have the liquidity to buy even if they have the cash flow. The number of actors matter as moving to different cities typically means changing jobs which may or may not be viable, if alternative cities have the same pricing dynamics at play - then it may not be possible to find a better alternative in price. As to the reason why this all matters and we aren't content with simply choosing to rent from REIT A or REIT B is that zoning boards have proven unable to cut through A & B's protests against new construction. While A&B may compete with each other they do not compete with any alternative, and all potential customers must acquire housing. As long as the total number of housing units remains below the demand for housing then A&B will benefit. In practice there are still a number of players who interact with the zoning board - but the net result is still a frustratingly stagnant housing supply.

sgregnt 5y ago
IMO, this is still a free market modulo the part with the city planning which is not about voluntary exchange of services or goods but a coertion by law. The definition of free market is so much broader than the peculiarities you've mentioned. Couldn't there be a free market before the fiat money existed? In any case, in my original post I was talking about forces of free market, these forces might exist in partially free market where many things are not a free choice but consequence of one or the other type of social coercion. Free market force: all it means is that the specific exchange between the parties was done voluntarily as a manifestation of the parties preferences in face of all other alternatives they have. In this sense the parties came to a conclusion that this action maximizes their utility. I'm not arguing that free market forces are better than the alternative (you need to define what you mean by better), just saying in terms of resources allocation, free market forces maximize utility in face of other alternatives. You can argue that this is a prisoner dilemma situation etc... but that's a fallacy as well IMO (can discuss this if more details are desired)