DSGE
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- Dec 24, 2011
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Sort of correct, by good advertising , availability, convince ,..etc other qualities you probably can still do good setting the price a little high in some circumstances. ( look at the guy that made the pet rock he's a million are and do you think is product was worth as much as he obtained for it... Many people have done the equivalent of what he did and went broke or made no money/little money ... point is the reason why somebody makes it with a product or not has alot to do with public awareness and marketing it well.... I do agree alot of good products sell them selves but not always )
Plus what happens if somebody setup 2 companies one with really low prices one with higher then normal prices .. he could still manipulate people into buy stuff using psychology to some extent... obviously the smart person that knows this stuff can see thru it.... But still most people cann't.
Well we can prevent the market from adjusting to the competitive price if we interfere through the government to prevent competition. If somebody comes up with the idea for a pet rock, and the government says "okay, nobody else except this guy is allowed to produce pet rocks for 20 years", that prevents people from entering the pet rock business and bringing the price down to near what it costs to make a pet rock. So if you don't think that's fair, you can think about how you'd like to reform intellectual property laws.
As to the, "manipulate people to want things using psychology", how exactly do you plan to stop that? How do you tell if somebody has been "manipulated" into wanting something or if they legitimately want it? Even if they have been manipulated, they do want it now. Are you gonna stop them from getting it? Maybe you want to make "manipulation" illegal? How do you tell what's manipulation and what's just plain advertising? This isn't something you can deal with.
Also, again, none of this is related to a monetary economy. All this happens in a barter economy as well.
Point being the money system is not fair and is biased to the rich.
Except nothing you have said at all relates to money. Money is the "medium of exchange". All you've been talking about so far is exchange. Exchange happens in a barter economy; that's what barter is.
... in that the buyer can hold out for the guy that is going to pay the most.
Ya, it works both ways to some extent but more so favors the seller then the buyer specially when the buyer has no frame of reference on what a fair price is.
Look, competitive markets lower the price to near the cost of producing the good. What you'd call a "fair" price. Deviations from the "fair" price happen because of deviations from competition. So our goal should be to promote competition within the market place, if you care about fair prices.
The only fair way is to give the people a frame of reference to a price range ... in the barter system it would be equivalent to making people aware what it takes to make or have a particular product manufactured (i.e time, resources,...etc some sort of paper listing what was done in an understandable way that the majority of people will know how to interpret. ( so they can base on that how much their range /value of the product it is to them ) That will even out the playing ground.
The price falls to that level automatically in competitive market. If there's a deviation from competition, it doesn't matter if people are aware of the cost of producing things. The supply will be restricted which will raise the price, for a given demand.
These are all points about the way markets function. If you want to turn the thread into a discussion on the price mechanism, fair enough. But do you recognise that none of this has anything to do with money? Prices exists in any economy. How they're set is not at all related to access to money, the medium of exchange.