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by Chrisoaks 1061 days ago
Sounds like you’re recognizing that the example is positive sum.

And bringing currency into the equation doesn’t change the fact that the plumber is better off for engaging in the trade.

Not all ways of spending money create the same value. He could also spend the money by burning it, which would be negative sum.

1 comments

It is not positive sum, in competitive market it is basically exchanging services, and each party has to agree on mutual value of services being exchanged otherwise no trade.

Accountant values his labor as 100/hr and plumber values his services as 100/hr and they simply exchanche services.

How is it positive sum?

Because the price paid is somewhat less than the value derived. You might have been willing to pay him $110 and he might have been willing to walk away with $90. But regardless of whether you settle on a rate of $90 or $110 or split the difference at $100, a $20 positive sum is created.

You mention competitive markets, where surplus is reduced or almost eliminated. But most markets do not reach such a late stage level of optimization.