Date:         Fri, 10 Jan 2003 16:39:29 -0500
Reply-To:     Marc Perdue <marcperdue@ADELPHIA.NET>
Sender:       Vanagon Mailing List <vanagon@gerry.vanagon.com>
From:         Marc Perdue <marcperdue@ADELPHIA.NET>
Subject:      Friday Econ 101,
              was: Re: Manipulated auctions,was:  Re: Does this bidding look
              fish y to you?
Content-Type: text/plain; charset=us-ascii

Jeffrey Schwaia wrote:

> You're a brave man...
>
> The only exception to your argument would be when there is only one actual
> bidder.  In this case, the bidder could've paid substantially less without
> the shill bidding.  Obviously, the real bidder was willing to pay more, but
> is it ethical that the seller drove the price up through shill bidding?
>

It's not so much that it's unethical, but that it indicates that a seller
doesn't have faith in the free-market economy which he is trying to use to sell
his product.  In such an economy, where information on products and prices is
readily available, a bidder would still have competition and the seller should
have faith that they will receive an amount that is in line with the true market
value of the product they're selling.  If the deal was really good, i.e., under
the true market value of the product based on supply and demand for the product,
other bidders would have bid on it.  Now, if the seller shill bids the price up
over the true market value, then he will wind up winning the bid and what does
that get him?  Certainly the original bidder doesn't get as good a deal as he
would have hoped, but getting a really great deal on a product usually indicates
a failure in some aspect of a free-market economy.

>
> Additionally, I've heard tale of sellers who will shill bid beyond the
> highest real bidder and then contact the real bidder after the auction to
> offer the item because the "winning bidder" did not complete the
> transaction.
>

In this case, the second-highest bidder still dictates the selling price because
they can refuse to buy the product if the asking price is over the amount
they're willing to spend.  The seller can go down the line doing this and they
will only sell the product when they reach a particular bidder's perceived
market value of the product.

>
> It's an interesting topic but will probably be killed due to lack of Vanagon
> content.
>
> Cheers,
>
> Jeff

People can complain all they want to about not getting great deals because
somebody spread the word about a product that's for sale, but that's what our
economy is about, love it or leave it, right or wrong.  I will not get into an
argument about whether it's right or not, but consider this: In a perfectly
operating free-market economy, you would have perfect and equitable distribution
of resources.  If this economy were global, which it is getting to be, albeit
slowly, there would be no disparities between rich and poor, there would be no
war, we would not squander our resources because they would be given a value
that was more reflective of their limited nature.  This would not only apply to
oil and trees from the tropical rainforest, but to the rainforest ecosystem, to
wildlife, diversity of species, CO2 buildup in the atmosphere, population, use
of water . . .

That's enough of my being devil's advocate.  Somebody else can do it for a while
. . .  :^)
Marc Perdue