Let us say, just for fun, that you woke up one morning to a world where everyone else’s demand curve — except yours — slopes upward. But it is not common knowledge that this is the case. What is the first oddity you would notice?
1. The most expensive radio stations would be filled with the most ads. The music would never come.
2. Your house would have no electricity, due to grid overload. (Is this true? An upward-sloping curve does not mean you will demand more at the current price. Think of twisting the demand curve around the current point of intersection.)
3. The most transparent agents would be found wandering the streets, bereft of all wealth, the victims of corporate price hikes.
4. You would wonder why so few people were reading your blog.
5. You would check ebay and find very high prices for items with active bidding. (Hmm…what kind of auction markets are behind the scenes for our power supply?) (Addendum: What is the Nash equilibrium here? Will people hold off bidding, hoping that tomorrow’s price will be higher?)
6. You would be puzzled why the Nordstrom’s sale was so empty.
7. It would take you days to notice any significant difference at all. After a few weeks, they would call in the econometricians to solve the identification problem in the data.
How long would it take you to figure out that other peoples’ demand curves were sloping upwards? How long would it take for society to fall apart?
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