Markets in everything, even if they don’t quite clear

by on November 21, 2006 at 1:21 pm in Economics | Permalink

This was on ebay:

You are bidding on the contact information for my friend who acquired a PS3 by waiting  in line outside Best Buy for two days in advance. I was there with him the entire time, but already sold mine. He has in his posession a PS3, extra controller, extra charger, three games (Resistance, Madden, and Ridge Racer), and a 2 year replacement plan. Keep in mind that you are not bidding on an actual system, but only the information where you might obtain one. You will be able to contact him and he is very willing to sell if the price is right. The unit is in the Atlanta, GA area and he would be willing to deliver in person if close by. PayPal is the only payment form accepted.

There were 20 bids and the final price was $1,100.

1 Trieu Truong November 21, 2006 at 2:49 pm

This reminds me of the Boston Red Sox bidding $51.1 million for the exclusive right to negotiate a contract with Daisuke Matsuzaka (and nothing else).

In fact, I wonder if that’s where the e-Bay seller got the idea. The Sox actually have a better contract. If a deal falls through, they get their money back.

2 David Zetland November 21, 2006 at 4:53 pm

This is a classic case of hold-up. The holder can insist on a high price (perhaps higher than list price if the winning bidder doesn’t believe in sunk costs) that extracts more (all) of the bidder’s CS.

3 Ron Workman November 21, 2006 at 5:13 pm

Thanks for the link-in to Dtoid.

4 megan November 22, 2006 at 7:04 am

This story does not surprise me. I heard one of Santa’s elves on talk back radio this morning, he said that there are not enough PS3’s around for everyone who wants one this year. He said children who don’t get a PS3 will get something good though. I hope its something better than what this guy got.

5 Will Johnson November 29, 2006 at 10:59 pm

This is a little crazy but it kinda fits into the mold of a hold-up as already suggested and some perfect price discrimination. The quantity is only one so the highest bidder gets the benefit of the item and the seller gets the highest price possible. The seller is a smart person and the buyer is bound to recieve the benefit that he or she percieves to be gained.

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