Rip off prices from RV Dealers
We took a trip along with our neighbors in our travel trailers to the Alabama Gulf Coast last week. While there both of us had issues with our travel trailer toilets due to improper winterizing. Nex...
Forum Discussion
There's a concept in Economics called the Double Coincidence of Wants where you have something I want and I have something you want, so we barter for those things. A bar owner could want a musician and offer to pay the musician in drinks in exchange for the entertainment, but the musician needs to pay rent and can't pay his landlord with drinks. But if the landlord throws a party and offers the musician free rent for the month in exchange for entertainment, then they have a "double coincidence" where they both want what the other has and they can barter a deal.
We use money instead of barter, but we still have to reach this same equilibrium of wants before we can make a deal. You have a pump for $100 and I want it badly enough to pay you $100, so we have a transaction.
Our "wants" aren't fixed though; they are flexible based on all sorts of variables. In this case the variable is time.
I want this pump today. It want it today so badly that I'll pay the premium price of $100. But if I have to wait until tomorrow, then I don't want the $100 version anymore because I can get it shipped to me tomorrow for $50. This is a "substitute good", which is one of the factors that influences a demand curve.
Does that mean that the supplier who has it today for $100 is ripping you off? Not at all. They're offering to supply it to buyers whose "want" (or demand) is higher than yours might be. Your demand curve doesn't match his supply curve, so there's no equilibrium and no double coincidence of wants. The transaction doesn't happen. As long as both sides are operating in a free market, there is no gouging: just messed up equilibriums.
We use money instead of barter, but we still have to reach this same equilibrium of wants before we can make a deal. You have a pump for $100 and I want it badly enough to pay you $100, so we have a transaction.
Our "wants" aren't fixed though; they are flexible based on all sorts of variables. In this case the variable is time.
I want this pump today. It want it today so badly that I'll pay the premium price of $100. But if I have to wait until tomorrow, then I don't want the $100 version anymore because I can get it shipped to me tomorrow for $50. This is a "substitute good", which is one of the factors that influences a demand curve.
Does that mean that the supplier who has it today for $100 is ripping you off? Not at all. They're offering to supply it to buyers whose "want" (or demand) is higher than yours might be. Your demand curve doesn't match his supply curve, so there's no equilibrium and no double coincidence of wants. The transaction doesn't happen. As long as both sides are operating in a free market, there is no gouging: just messed up equilibriums.
