Monday, March 14, 2011
Some dope in the WSJ wrote an article wondering why this Givenchy Pierrot T-shirt had a price tag at $800?
He interviewed the store owner who offered as excuses for the price, the cotton blend of which the T-shirt is made, the attractive and seasonally popular leopard print, the exclusivity of the designer, and that only a few hundred of these will be made.
While each of these plays a role in selling the T-shirt, it's the mutually beneficial agreement between the seller and the buyer that sets the price. Obviously at $800 there are people who want the T-shirt more than they want that $800 burning a hole in their pocket, while the seller wants the money more than he wants to keep the shirt. Without this freely agreed upon deal between buyer and seller, the transaction does not take place.
Less erudite people than TRR readers will scoff that the seller is greedy or the buyer is stupid, but neither of these is provably true. Buyers and sellers acting in their own interest agree on a price for an item and a transaction is made. That's how successful economies work.....efficiently allocating resources within the consumer-equilibrating framework of supply, demand, and price.
The next time you whine about the price of something not government related, remember that somebody must be willing to pay it, or else the price would be lower, and your refusal to pay it exerts downward pressure on the price.