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What you are saying is that the primary driver of price is ability to pay. This is basically a claim that the market isn't competitive at all. That's a fairly
by YokoZar 13y ago
What you are saying is that the primary driver of price is ability to pay. This is basically a claim that the market isn't competitive at all. That's a fairly strong thing to say, as even a vastly under-supplied market can be competitive.
- fharper1961 13y agoI don't understand how prices in a vastly under-supplied free market will not rise until they reach the maximum price buyers are willing to pay.
- YokoZar 13y ago"Willingness to pay" is different from "ability to pay" -- your willingness to pay will be greatly affected by the price of competitors or neighboring markets, for example.
- twic 13y agoWhat competitors? What neighbouring markets?
- YokoZar 13y agoRight, if there's no competitors or neighbouring markets, then you have a monopoly situation, and the sole seller (or cartel) are free to set prices as high as people are able to pay. But just because there is a shortage doesn't mean there's a monopoly.
- eli_gottlieb 13y agoIf it's what people see, it's what people see. I've definitely seen effects like that in real-estate markets.