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> It does kinda show how markets don't just magically hit an equilibrium price. There's lot of research on situations where market prices fail to work, but not
by jgalt212 2y ago
> It does kinda show how markets don't just magically hit an equilibrium price.
There's lot of research on situations where market prices fail to work, but not much (as far as I'm aware) of when they largely work, but there are times when the market seizes up (and how to avoid such situations). or do the risk of such situations are so great that a product should not a be allowed to have a truly "free" market. e.g. petroleum.
- fsckboy 2y agoit's difficult to impossible to believe that there is any failure currently in the international coffee market. (i'm replying as much to GP as to you, not disagreeing with you) >markets don't just magically hit an equilibrium price markets do magically, and quickly, hit a "market clearing price" where all the bids and asks that match are executed. the market can also slow when there are plenty of bids and asks but they are too far apart. an "equilibrium price" seems to imply some sort of stability, but when the future is uncertain, prices will be uncertain, without implying a market failure. there can be "information failures" that steer prices wrong, but prices can be uncertain just the same even given all current information.