07-08-2010, 08:44 PM
(07-08-2010, 08:03 PM)--Pete Wrote: And what is the market-clearing price for sand in Arabia or ice in Alaska. I have actually, through oversight, posted items in the AH (WoW) for less than the price a vendor would pay. And had those auctions fail.
And now we're into the fun world of transaction and information costs. It's not worth it to pick up a penny off the street, because you waste more than one cent of time and energy picking it up. I'm sure there's a 100 dollar bill lying around somewhere, but I don't know where it is, so I can't pick it up, and it wouldn't be worth the cost of finding out where it is. I can go farm more gold in 5 minutes of WoW than I could make trolling the AH for vendor trash - although I have made a few silvers here and there buying those up in the past.
As soon as there are transaction costs, we're no longer in an abstract Walrasian space, and market imperfections are inevitable. But still, I think electricity is a fairly well-behaved commodity, and the US is a gigantic market. (Though as Enron demonstrated, not an infinite one.)
-Jester