Econ 101 is spent largely on the law of supply and demand, one of the few principles of economics that isn't hotly debated in think tanks — it's considered a given. Republicans extol this law, except when it conflicts with their desires to reduce the supply of something that offends their corporate or cultural clients; Democrats seem mostly to pretend it doesn't exist. Both parties could use a few more endorsements on their respective reality checks, and one of the best places I've seen for that lately is the Internet auction, as exemplified by the massive online garage sale that is eBay.

Despite its seemingly pig-Latinate name, eBay is quite serious. Items selling for two bucks get the same general level of service as items selling for two million. Over 1500 categories cover almost any conceivable legal item, though worrying over the impact of gun laws has led the service to discontinue firearms listings this year. At any given moment, eBay lists more than a million items for sale, a number so astonishing to me, at least at first, that I had to go poking around in some of the categories in search of desirable oddities.

It didn't take long to find a fistful of goodies for my shelf. After completing eBay's two-step registration procedure — you must first leave them your email address, to which they send a registration number which you fill in on the site later — I was ready to go shopping. Bidding is a simple matter of completing a form and watching events unfold. Let's say there's a widget being offered and the seller has set the minimum to $10. If I'm the first bidder on the widget, I might put in a maximum bid of $13.50, and thereby hangs a tale: If no one else bids on the widget, it's mine for the ten bucks; if anyone else wants in, they're going to have to beat my $13.50. This does keep me from spending more than I'd planned — unless, of course, I raise my maximum bid to keep the item from falling into the Wrong Hands (which is to say, hands other than mine). Items in great demand, needless to say, get lots of bids, which inevitably pushes the price up. Supply and demand in its purest form.

One potential problem with an online auction is that you have no way of knowing much of anything about the traders themselves. eBay offers a feedback system in which buyers and sellers may post comments about one another — positive feedback rates +1, neutral feedback zero, negative feedback -1 — and the sum of your feedback becomes your score, which follows your name around wherever you go. (As of this writing, a mere ten days after my first bids, I have yet to pick up any feedback points.) Active traders with good records have scores in the hundreds, even thousands. It's hardly a guarantee — as the guys hawking mutual funds say, past results do not guarantee future performance — but it's useful information to have.

I can't see using eBay or its competitors for big-ticket items like cars or real estate; at that price level, I want to see things in person if at all possible. But for my particular interests (old books and records, mostly), eBay is a marvelous playground, and the fact that it happens to contain a real-world economic lesson is just icing on the cake. How much I'm paying for that icing — well, that's Econ 102.

The Vent

#146
25 April 1999

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