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by 0dte
779 days ago
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I disagree with the author's first point–that the decrease in profitability of eBay middlemen due to more efficient algorithmic arbitrageurs is an example of overoptimization, creating negative social consequences through "hurting buyers by eliminating uncertainty that sometimes results in lower-than-optimal-to-sellers prices." In this example, these "lower-than-optimal" prices weren't passed on to the end consumers in the first place–instead, arbitrageurs like the author's friend would take advantage of them to gain a profit. The end prices that the average, uninformed buyer would see would therefore be inflated, with traders like the author's friend taking their cut. Sure, the rise of more efficient, algorithmic players decreased the profitability of less sophisticated middlemen like the author's friend. But, since these algorithmic players were more efficient, they were able to take less of a cut, leading to lower prices (and overall benefit) for the average buyer. |
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It is true a more efficient market would have original sellers finding that optimal sale price, but when they can’t, getting some “help” from resellers does maximize value to buyers by sending goods where they are most appreciated or needed.
And resellers also signal to anyone paying attention, the true value of goods. So sellers that look around have an easier time choosing optimal pricing as well.
If sellers need more sophisticated tools to do that, that would seem like a net positive business opportunity for a seller or reseller to create those tools for others to use.
But complaining that less efficient markets had advantages to particular people, while ignoring that optimal pricing is THE core service open markets provide to allocate goods to everyone’s overall greatest benefit, doesn’t make sense.