Re: Free Market Works

[SheetWise]

I like you.

[sam h]

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There has to be a reason to artificially set the price at $40. The most obvious is because the proprietor values it higher (why else control it?).

Let's say the owner values it at $100. If there is an artificial limit set at $40, he will still rent it -- because it is an unrecoverable asset (it can't be placed into inventory). But he valued it higher. I may value it at $100 as well, so I either get a great deal -- or find it unavailable because it was artifically priced too low. In the later case, both I and the proprietor were denied the right to make a deal we both thought was fair, and the beneficiary of our loss is some unknown person who got a great deal.

If the asset is recoverable, the proprietor may choose not to sell it at all. For example, you'll notice that when an event that could effect the price of gasoline occurs -- or crude oil goes up -- the price at the pump is immediately raised. This makes sense, since the owner is selling based on replacement cost -- not what he paid for the current inventory. If there was speculation that gas would go to $10 a gallon, and I had 10,000 gallons in the ground, and the govenment told me I could only charge $3 -- I would probably lock the doors and not sell it at all until the market stablized.

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I agree, but this is just a different set of issues. You originally said that there was something intrinsically beneficial about the fact that people who valued goods above prices could buy them and those that didn't had the option not to buy. My point was that this is true at any given price, even in controlled markets.

[sam h]

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But the people who value the room the MOST will NOT necessarily get the room, and THAT is why efficiency IS degraded with pricecaps, even for products without elastic supply.

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You are just changing the definition of efficiency to suit your needs. Economic efficiency is not about pleasing consumers who value products the most. It is about productive resources being channelled in the optimal manner. There is nothing inherently "inefficient" about somebody not getting a hotel room who would be willing to pay more than somebody else.

[SheetWise]

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I agree, but this is just a different set of issues. You originally said that there was something intrinsically beneficial about the fact that people who valued goods above prices could buy them and those that didn't had the option not to buy. My point was that this is true at any given price, even in controlled markets.

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What is intrinsically beneficial is that the product/supply/service will be available if the price can move.

If someone wants to sell $5 bills for $1, that's ok. But I can guarantee you, you wouldn't want to be second in line behind me.

[sam h]

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Smaller every day. Disappearing. It's just legacy regulations. You're crossing a public right-of-way to get onto your private property. Original point was there is not an argument for regulation or for more regulation -- there is a good example of what can be done with less.

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What percentage of users get their internet service through infrastructure other than telephone lines or cable lines?

[sam h]

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What is intrinsically beneficial is that the product/supply/service will be available if the price can move.

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I agree in general. But again, it doesn't apply to the case of hurricanes and hotels because supply is inelastic.

[SheetWise]

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Economic efficiency is not about pleasing consumers who value products the most. It is about productive resources being channelled in the optimal manner. There is nothing inherently "inefficient" about somebody not getting a hotel room who would be willing to pay more than somebody else.

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Then you shouldn't have any problem with rent control. As I asked in a previous post ...

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I'm curious -- do you believe producers should be able to gather the full rent from a long term disjunction?
Link.

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[tylerdurden]

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[ QUOTE ]
But the people who value the room the MOST will NOT necessarily get the room, and THAT is why efficiency IS degraded with pricecaps, even for products without elastic supply.

[/ QUOTE ]

You are just changing the definition of efficiency to suit your needs. Economic efficiency is not about pleasing consumers who value products the most. It is about productive resources being channelled in the optimal manner. There is nothing inherently "inefficient" about somebody not getting a hotel room who would be willing to pay more than somebody else.

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How can a limited supply of an item that is in high demand, but with an artifically capped price be anything BUT less efficiently allocated than one with a freely-floating price?

Price caps cause distortions in choices. That's inefficiency. You're talking about "efficiency" from some social policy point of view, not economics.

[SheetWise]

Depends where you are. Several small cities and most college campuses are already wireless. Businesses in the West are way ahead of businesses in the East utilizing alternative infrastructure. Alaska is way ahead of the lower 48. What you see is more alternatives where the building and infrastructure are new -- part of why European and Asian wireless systems are so much better than the US -- it's because their previous systems were so bad -- they had no existing infrastructure to utilize. Numbers vary, but the trend is clear -- POTS is going away. Sometimes it still makes sense to use it -- but it wouldn't make any sense to build regulations using it as a model.

[SheetWise]

How they are distributed and utilized is not fixed -- raising the price will have an effect on how they are utilized.