Lindt Chocolate does not cost the same in Oxford and Cape Town. “The Law of One Price” (LOOP) is the theoretical idea that the same thing should sell for the same price. The LOOP does not hold, because there are trade frictions. What something is does not determine its price, because price is not value. Price is a negotiation between the buyer and the seller of a thing *in a container*. The container determines the barriers to entry and barriers to exit. The container determines the story. The story determines the agreement. Money is made by solving problems for decision makers with money. The decision maker does not know everything, is not everywhere, and each decision maker has their own set of competing things that they value. More than half the battle of making money is becoming a part of a decision maker’s value recognition. “The thing” is not what determines the price.
No comments:
Post a Comment