posted on August 4, 2001 08:29:39 PM
You are ALL reading waaaay too far into what I am stating. Waaaaaay too far.
This is NOT Economics 101, since my hypothesis (yes, not a real situation folks) stated that the other buyer only wanted ONE of the items---NOT ALL. The point was that the auction-type transaction created a situation where all because the second buyer couldn't win ONE of these items, ALL of the items had there prices jacked up. Not ONE, but ALL.
THAT is the crux of my very misunderstood and misinterpreted point.
I am sorry so many of you are lauching off on these little diatribes in directions other than that of my initial posting.
Additionally, a RIP OFF is when you have to pay much more for something than is reasonable UNDER SPECIFIC CIRCUMSTANCES, in this case an auction that results in you having a price be raised on you irrespective to value, since the price was raised to win ONE item, NOT ALL items.
By the way, I stated that it takes at least 2 buyers to establish a market price, because most educated collectors that I know, understand that the amount you pay for something is irrelevant if you cannot expect to sell the item to at least one other buyer at that price. If you simply look at the top price paid for something, you may get a very distorted idea of it's actual potential value.
If someone buys a marble for 10 million dollars, unless there's another person willing to pay that, the "value" is highly inflated and specious.
I feel as if I am talking to many amateur dealers who are only interested in getting high prices. Truth, logic and common sense be damnned.
posted on August 4, 2001 08:41:01 PM
David, I have understood your point all along, but the point you are missing is that the buyer who bid $100 has created the demand by bidding on 7 items. If he bid on two, one more buyer would not drive the price up by bidding on one item.
posted on August 4, 2001 08:52:12 PM"I feel as if I am talking to many amateur dealers who are only interested in getting high prices. Truth, logic and common sense be damnned."
I have read this thread twice now. This is an auction venue. Auction venues put an item up and let the bidding begin. Yes, the "dealer" is only interested at that point in getting a high price. He does not set the price. The bidders set the price.
Unless the seller is bidding on his own auctions or has an agent to do it for him, I do not see how a "rip off" is occuring.
Perhaps you would find a "fixed price" venue more suitable?
I do hear what you are saying, but to be honest I am having a bit of trouble understanding it.
posted on August 4, 2001 08:56:01 PMIn a non-auction setting, only ONE of the items would have gone for as much, since the other buyer ONLY wanted ONE---not 7.
Not necessarily.
Let's say the items came up at auction one each week.
First week, Collector and Only Wants One Buyer go head to head. Collector wins it but at $91.
Second week, Collector and Only Wants One Byuyer go head to head. Collector wins it again, at $91.
And so forth.
Now, unless Only Wants One Buyer finally manages to outbid Collector or gives up and goes away, the outcome is going to be the same if the items are auctioned one at a time or all seven at once.
posted on August 4, 2001 08:56:11 PM
You walk onto a car lot and want to buy all 5 red cars for $25,000 each. Suddnely another person walks up and wants just one red car. What happens next?
Are you now going to have to pay more for ALL 5 cars, just because the other buyer wants to buy one?
Of course not, that's ridiculous. Therein lies my point as to why auctions can be a real rip off, just by the nature of the transaction.
posted on August 4, 2001 09:01:32 PM
There are 1,000 of a particular item up for auction. They all start at $9.99. You decide to bid $100 for all.
Only one other person on the face of the earth is interested in these, and he only wants ONE. He proceed to bid $95 on every one, hoping to finally win one. He doesn't, yet you have now had to pay $96 for each of 1,000 items, just because one other buyer simply wanted to win ONE.
posted on August 4, 2001 09:06:20 PMAre you now going to have to pay more for ALL 5 cars, just because the other buyer wants to buy one?
Never bought the "must have" car of the year, have you?
Yes, it does happen, even in non-auction situations.
When DEMAND for an item goes up, the price follows. No, they won't raise the sticker price on the car but they won't deal like they would for that puke green car with the red interior someone mistakenly ordered.
Before the first Mercedes SUV rolled off the assembly line, there were shortages and waiting lists everywhere. Some buyers paid a premium to get them.
posted on August 4, 2001 09:07:47 PM
This is an old Abbott and Costello routine from a Movie on Cable last week, a Take-Off on the 7th Son of a 7th Son of a ........................
posted on August 4, 2001 09:12:41 PM
I have to say it again because I firmly believe you want to understand, two buyers created the rise of price to $91, not one buyer. The fact that Buyer #1 bid on 7 of the eight items created demand, and we all know demand causes the price to rise. A lack of demand keeps the price low, so if Buyer #1 bid on two of the items, there is a lack of demand keeping the price at $90. Tell me it's starting to sink in!
posted on August 4, 2001 09:19:29 PM...yet you have now had to pay $96 for each of 1,000 items, just because one other buyer simply wanted to win ONE.
No, you have to pay $96 because you were willing to pay that much. The auctions start at $9.99 and you bid $100? If you don't want to pay $100 each, don't bid that much.
posted on August 4, 2001 09:22:32 PM
Seems to me what you are really saying is auction venues may not be advantageous to a collector because there is always a chance someone will come along and drive the price up higher than the item is really worth or more importantly, higer than the collector had hoped to pay.
Are you a buyer and a seller on eBay or do you just buy?
What we are all trying to say is that you are having to pay $96 for each and every one NOT because of a rip off but because there is another buyer out there who is willing to pay $95 for ONE and as long as you want it more than he does..you will have to continue to pay more, whether it is for ONE or for ONE THOUSAND.
It's not a rip off, it's a supply and demand situation caused by 2 people wanting the same thing even if only one of the people wants a single one.
Actually the Collector is actually causing his own price to rise by not being willing to let someone else have one. IF he let one go, then Only Wants One Buyer would go away and Collector could buy the rest at the lower price. It's as much Collector's fault as it is Only Wants One Buyer that the price is being driven sky high.
posted on August 4, 2001 09:32:53 PMfirst person to come along to pay my price takes it home. Market value has been established.
That's a market value in one sense, but true market value is the result of competition between buyers. An auction format is the one of the best ways to set a "true market value". That's how stock prices are set. (Nasdaq is an auction...)
There are wild up and downs on Wall Street, just like on eBay
posted on August 4, 2001 09:40:53 PMThis is NOT Economics 101, since my hypothesis (yes, not a real situation folks) stated that the other buyer only wanted ONE of the items---NOT ALL
You said one buyer wanted 1, another buyer wanted 7 (1 + 7 = 8)
There was only 7 items available, but the demand was for 8. The price went up.
Supply and Demand. When the supply is less than the demand, the price goes up. It is Economics 101. (or at least it was in 1981 when I took Economics 101 )
a RIP OFF is when you have to pay much more for something than is reasonable UNDER SPECIFIC CIRCUMSTANCES
No, a RIP OFF is when someone steals or cheats. Two bidders bidding one of my items up high isn't a RIP OFF. It's simply 2 bidders bidding at an auction, nothing more, nothing less.
, in this case an auction that results in you having a price be raised on you irrespective to value, since the price was raised to win ONE item, NOT ALL items.
No, the price was raised BECAUSE the first buyer wanted to win ALL the items, and some one wanted one of them. Not enough supply to meet the demand.
What part of "The demand was higher than the supply" don't you understand?
, I stated that it takes at least 2 buyers to establish a market price
You also stated:
he can likely be waaaaay overcharged due to another bidder
Another bidder????? like in "at least 2 buyers to establish a market "
------------
Using the reasoning being employed here, once you are outbid on an item, you should never bid on another.
I guess so.
[ edited by Microbes on Aug 4, 2001 10:05 PM ]
[ edited by Microbes on Aug 4, 2001 10:10 PM ]
posted on August 4, 2001 10:24:52 PMYou walk onto a car lot and want to buy all 5 red cars for $25,000 each. Suddnely another person walks up and wants just one red car. What happens next?
Please correct me if I'm wrong but....
If this is not an auction, just a fixed price car lot, the buyer who only wants 1 would walk away with NONE because the first buyer had just bought them all and there were none left for the second buyer to buy.
posted on August 4, 2001 11:15:18 PM
Yes, I understand that. But I thought that's what this discussion was about (auctions vs. fixed price sales) based on the original posters statement:
In a non-auction setting, only ONE of the items would have gone for as much, since the other buyer ONLY wanted ONE---not 7.
Or am I wrong in assuming that a "non-auction setting" would be a "fixed price setting"?
If I am right about this, then the price would not have gone up on any of them because they all would have been sold. If the price on even 1 would have gone up, that would have made it an "auction setting".
posted on August 4, 2001 11:27:56 PMOr am I wrong in assuming that a "non-auction setting" would be a "fixed price setting"?
You might be. Go back and read what Eventer had to say about the first Mercedes SUV. Look what happened the first year Cabbage patch kids came out. Look what happened when the Play Station 2 came out.
Or look what happens every week at the gas station Is a gas station a "fixed price setting?
Is there really any fixed price settings? Auctions tend to swing the wider than other settings when supply and demand goes up and down, but if the two get out of balance, prices adjust till they are back in balance.
[ edited by Microbes on Aug 4, 2001 11:29 PM ]
posted on August 4, 2001 11:31:37 PM
I understand that the price could go up on the next shipment based on the demand, but the price would not have gone up on the original 5 (because they were already sold to the first buyer), none of which would have gone to the second buyer (because they were already sold to the first buyer).
posted on August 4, 2001 11:37:26 PM
While engaging in what has become quite the little mutual verbal masturbation session, not a one of you has seemed to grasp the simple logic at hand.
For the final time (so read this over and over if you still don't get it);
Someone with the intent of buying ONLY ONE item, who drives the price of ALL items up by trying to win that one item, is creating a situation where the high bidder is paying a lot more than the real market value.
If the first buyer in fact won ALL 7 items and then turned around and put them all up for auction, he would likely sell only one (to the other bidder who drove the prices up), and take a major loss on the rest.
Why? because of the simple fact that this is not texbook supply and demand as many of you pseudo-economics experts seem to think it is.
Your stock arguments are being misused and poorly directed.
Try looking past the end of your noses, and maybe think out of the box a bit.
posted on August 4, 2001 11:39:33 PM
In a non-auction setting, the seller who has 7 widgets (and good market research) would price them at the highest amount that someone (or several someones) would pay for all 7.
So, in your example, since there is a willing buyer for all 7 widgets at $100 each, that would be the selling price.
posted on August 4, 2001 11:45:06 PMbut the price would not have gone up on the original 5
No, in that setting, possibly (due to the price going up on the next shipment) the buyer wanting one might be the one to pay a higher price. Different setting, a different person may pay a higher price.
Also, in the car lot setting, if they are "selling out" as fast as they get them in, like Eventer said they won't raise the sticker price on the car but they won't deal like they would for that puke green car.
The first buyer, quite possibly, by showing that much interest, (and the car lot knowing there are other buyers waiting) would have to pay the "sticker price" if he really did want all five cars.
posted on August 4, 2001 11:45:16 PM
It's not exactly fair to change the example I gave or draw inferences that were not implied, just to suit your argument.
Typically, an auction bidder may bid higher than what they expect to pay for ALL 7, allowing for someone to come along and raise the price of 1 or 2, not all 7. They will cast a sort of "net" of higher bids. This DOES NOT justify the result of what I originally gave as an example, where someone has to pay much more for ALL, simply because someone wanted only ONE.
posted on August 5, 2001 12:00:20 AMIf the first buyer in fact won ALL 7 items and then turned around and put them all up for auction, he would likely sell only one (to the other bidder who drove the prices up), and take a major loss on the rest.
Yes, he is likely to take a loss. Why? When he bought them, the "demand" was for 8 and there was a shortage. When he sells the demand is for 1 and there is a surplus.
Typically, an auction bidder may bid higher than what they expect to pay for ALL 7, allowing for someone to come along and raise the oprice of 1 or 2, not all 7
No, typically an auction bidder will bid his max until he gets to buy what he wants. Only when he has what he wants, does he quit trying to buy it.
the simple fact that this is not texbook supply and demand as many of you pseudo-economics experts seem to think it is.
My Econ 101 prof told us an auction was the purest form of supply and demand there is. I'll have to tell him you said it is pseudo-economics
He called anything that was regulated by the government pseudo-economics.
posted on August 5, 2001 12:01:23 AM"Someone with the intent of buying ONLY ONE item, who drives the price of ALL items up by trying to win that one item, is creating a situation where the high bidder is paying a lot more than the real market value."
"Try looking past the end of your noses, and maybe think out of the box a bit."
Maybe you should take your own advice.
Everyone has been really kind to overlook what has become obvious....you really don't understand your own argument.
The high bidder can not be forced to pay a lot more than the real market value!!!
The high bidder chooses, of his own free will, how much he is willing to pay. If that is a lot more than the "real" market value, well that is his fault, not anyone elses.
