| Author: | Hak Choi | ISBN: | 1230002363967 |
| Publisher: | Hak Choi | Publication: | June 8, 2018 |
| Imprint: | Language: | English |
| Author: | Hak Choi |
| ISBN: | 1230002363967 |
| Publisher: | Hak Choi |
| Publication: | June 8, 2018 |
| Imprint: | |
| Language: | English |
Auction aims for highest possible price, but economists made two wrong extensions. Some thought the price can be indefinitely increased according to demand; some recommended discount to the successful bidder. The former mistake stems from the misunderstanding that the vertical line is a supply; while the latter is actually the result of too much supply (it is not auction any more). When some scarce resource is auctioned, it may bring in revenue for a government. But, if the price is set too high that leaves no profit margin to the bidders, no one will want the auctioned objects. The results are: 1. shortfall of revenue; 2. resource wastage; and 3. downfall of the government.
Auction aims for highest possible price, but economists made two wrong extensions. Some thought the price can be indefinitely increased according to demand; some recommended discount to the successful bidder. The former mistake stems from the misunderstanding that the vertical line is a supply; while the latter is actually the result of too much supply (it is not auction any more). When some scarce resource is auctioned, it may bring in revenue for a government. But, if the price is set too high that leaves no profit margin to the bidders, no one will want the auctioned objects. The results are: 1. shortfall of revenue; 2. resource wastage; and 3. downfall of the government.
