Market Equilibrium, Ebay, and Love …

March 13, 2010 · Posted in General Economics 


Today a reader asked me a question. I replied to her via email, but unfortunately the email bounced back:

I just read the essay about the equilibrium in a market. Would you consider ebay as a market where this “ideal state of equilibrium” is achieved? Or are market equilibriums never achieved in real life?

My response:

Hi Christina,

Thanks much for this great question.

The market equilibrium I refer to is really never lastingly achieved in real life.

See, all events that occur on the market are processes. We always act in order to remove one or the other uneasiness in our lives. This is evident in the very fact that we act.

On ebay you constantly find people who prefer owning cash to owning a pair of shoes and you will find people who prefer owning shoes to owning cash. This is the reason why ebay exists in the first place, right? Ebay woudn’t exist if the market had reached the theoretical state of market equilibrium.

What I would say about ebay is that it is a great facilitator of the process of moving toward the theoretical state of market equilibrium more quickly. This targeted state, however, remains in constant flux.

The closest I can think of where a “market equilibrium” of sorts is reached is two people falling in love. When you fall in love, for a brief moment you feel like things can’t get any better. You are above all things and you wish nothing would change. But, as it is with human nature, we fall out of love after some time and that is when the real process of loving can be actively pursued … :)

Let me know if you have any more questions!

Best regards,
Nima

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