Markets: A Crucial part of our Economic System

1. Markets: A Crucial part of our Economic System Sebastian Coe Economics 201 B0Z1 Prof: Daniel Bell

2. I´m here in Chile, I’m Studying business through KYVU. I am acquiring entrepeneural skills, but I don’t have anything to Sell

3. After thinking about it, I realize that I like to look at Jewlery, especially ethnic items. They are easy To find here and tourists really like them. I think I could sell those items too. It could start as a Hobby, in order to apply the skills I am learning in my Classes.

4. Locallly, I am in a Monopolistic-Competitive Market. Prices are Not perfectly elastic, but in order to compete I would have to buy large Amounts of products, and sell them within the ranges that the rest Of the sellers use. I want to start out small, and this is a barrier for me To start locally. Also my items would have to have something “special” About them to diffrence myself from the rest. I can aquire earrings for $7.00 and dolls for $3.00 From a local arts and crafts salesperson. Nevertheless I want to sell them for $22.00 and $18.00 each. Sadly for me, no one is willing to buy at those prices. At most someone might pay $7.50 and 3.50. There are Many sellers in the local market, and competition is not Price-based.

5. We would pay $18 for a Chilean Doll, if someone had it for sale. “We’d all like to have some southern Chilean Jewlery, but we are unwilling and unable, to make A trip there, and we don’t know anyone who could Bring us some.” We would even pay up to $25 dollars for a pair of earrings. I would like some South American Jewlery to resell here in Japan. On the other side of the world, there are consumers with An even different problem.

6. Finally a solution comes up. “Hello everyone, I have a golden Opportunity to solve these and Many other problems.” “What is it?” EBAY!

7. Ebay creates a market, or a place where buyers or sellers meet, on the internet. Anyone with access to the internet can use ebay. Instead of charging rent for The use of stores or office space, ebay charges the sellers based on the amount They sell. Sellers and buyers are happy and increase their utility. Sellers can reach places They previously could not have, and they enter a now competetive market. Buyers Have access to all kinds of goods and they must now bid on what they want. The highest amount of money that someone will pay for an item, is the market Price. Buyers can compare the items To items they can acquire locally And see if it’s worth getting it From somewhere else. In my case, since my items are Produced in a certain area of the World, I can charge monopoly Prices. There are no, or very few Competitors. Nevertheless, if I Charge too much, buyers might Substitute Chilean Jewlery for Jewlery of other kinds.

8. Since we have a neo-liberal economy, markets should be as free as possible. In a command system, there would be no need for these markets, because Government planners would make all the decisions about what to produce, Who to produce it for and how much they should get. In our system Government and private market operators limit themselves to insuring that Market transactions are done in an honest and orderly way. END Markets are crucial to a functioning economy. Without A place for buyers and sellers to meet and negociate Freely, the movement of goods and services will be Paralized. Whether it be a fruit market built by the County, a corner where crop pickers meet, or even a Site on the internet, markets are building blocks of the World economy.