Re: IWA Moorings Tender Petition

On Sun, 28 Oct 2007 09:37:13 +0000, Adrian Stott <adrian@xxxxxxxx>
wrote:

On Sat, 27 Oct 2007 13:49:26 +0100, Nick Atty
<1-nospam@xxxxxxxxxxxxxxxxxxxxxxxx> wrote:

That there is a queue does not prove that the prices aren't right, as in my
hypothetical example.

So sorry, but no.

Let's suppose that there are a thousand people on the waterways who can
afford to pay £500 a year for moorings and cannot afford £510. If there
are only 900 moorings available for £505, then we have:
a) a shortage of moorings
b) the moorings at the market price.

If the market price is £505, then in your example there is no shortage
of moorings. The £500 people are not demand at the market price. The
existence of a set of people who would be willing to acquire a mooring
at some below-market price does *not* create a shortage.

e.g. Porsches are being sold for £100,000 each. I (and many others)
cannot afford that, but would be able to afford one at £50. Therefore
there is a shortage of Porsches?

In your example, there is no queue. I think. You actually don't
describe the situation fully enough for me to be sure. How many
people are willing to pay £505 or more? If there are fewer than 900,
then the market price will fall to below £505. If there are more than
900, then it will rise. But in either case, there is still no queue.

Let's try again. I thought it was pretty clear as quoted above, but...

Imagine a pool of people who can afford to pay approximately the same
price for a commodity, which is in limited supply.

There are more people than there are items.

So there are more people wanting items than there are items to give out.

But because the amount they are able to pay is limited, if the price of
the items was raised then the wouldn't be enough people able to pay for
them all to sell.

Your "b)" is wrong. Or, at least, not fully described. How was the
£505 rate arrived at?

It doesn't matter. £505 can be "the market price" even without a market
- it's the price a market would have established if there had been one

No, it can't, and this matters crucially. The market price is not
theoretical. That's the point of it, and a key difference between the
previous BW practice of price estimation and prices obtained at
auction.

The market price is the *actual* highest price an actual buyer is
willing to pay (assuming that the vendor can insist the deal be
completed at that price once he accepts the buyer's offer).

It is obviously illogical to say you can have a market price without a
market. That's like saying you can have a blue shirt when you don't
have a shirt.

No it isn't. To keep on the silly analogies, you're saying that I
can't go to Sweden because I've never been to Sweden.

However, it is correct to say that those who cannot afford to pay a
price will not be doing any buying. That is the way the world works
generally, as I understand it, and for non-necessities (such as
boating) I support that.

That's not what I meant at all. In my situation, everybody can afford
to pay for the moorings, creating a market wouldn't increase the price,
and yet there is a queue.

No. In your example, the "thousand people" *cannot* afford to pay for
a mooring, and so are not in a queue.

As I've said, you don't provide enough information to determine
whether £505 is the market price.

Your example is fatally flawed, I'm afraid.

Why? Let's put to one side this silly idea that because you aren't
doing something you can't do it. In fact, let me try to explain the
whole thing again.

Situation (remember, a hypothetical situation).

1000 people who want moorings, the maximum they can afford to pay is
£510 pounds.

800 moorings.

Moorings currently priced at £500 pounds.

What effect would running this as a market rather than as a fixed price
have?

Therefore, counter to your original claim, the queue does *not* prove
that the moorings are underpriced.

Since your premise and your logic are both faulty, I'm afraid you
cannot reach that conclusion.

It's directly related. You seem to have completely misunderstood, and I
can't quite work out what it is you thought I said.

I hope the above has cleared that up.

No. It's made it clear that you don't understand me. But I still can't
see why.

I think you will find that there are queues for quite a few off-line
moorings too.

And yet they *do* operate at the market price. How come? You've
stated two or three times in this one post that the queue establishes
that the marina's aren't charging the market price. Why ever not?
They are separate companies, with freedom to set their prices however
they want. It's as much of a market as you could want, and more of one
than BW towpath moorings ever could even with an auction superimposed on
them.

Please see my latest reply to Will on this thread.

I think what has happened is that BW has for years consistently priced
under-market, and in light of that other providers have preferred to
keep their prices below-market too (and run waiting lists) to avoid
(false but potentially damaging) accusations of gouging.

Er, you've never dealt with a marina operator, have you? That really is
clutching at straws.

If there is a bimodal distribution of wealth among boat owners (which
again I believe to be a possible situation - there are those where the
boat is their principle asset, and those who run a boat as well as a
house), then it might well be that the market price for linear moorings
is already set near enough: because there are virtually two markets, and
two sets of customers.

I think there is no such distribution, although of course some boaters
are better off than others (over a continuum).

I think there is. What sort of shape do you think your continuum is
(hint, a continuum can be bimodal).

OTOH, a bimodal distribution can be discontinuous . A strictly
bimodal one (e.g. if each element has one of only two two distinct
values) is not a continuum.

Bimodal means "having to modes". Not "have two values".

I expect the wealth of boat owners to be distributed over a large
number of values. I guess it is most likely that the distribution is
a normal one, but I do not have data for verification.

And I suspect it has a number of peaks.
--
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(Waterways World site of the month, April 2001)
My Reply-To address *is* valid, though likely to die soon
.

Relevant Pages

  • Re: IWA Moorings Tender Petition
    ... afford to pay £500 a year for moorings and cannot afford £510. ... the moorings at the market price. ...
    (uk.rec.waterways)
  • Re: IWA Moorings Tender Petition
    ... afford to pay £500 a year for moorings and cannot afford £510. ... The £500 people are not demand at the market price. ...
    (uk.rec.waterways)
  • Re: IWA Moorings Tender Petition
    ... afford to pay £500 a year for moorings and cannot afford £510. ... The £500 people are not demand at the market price. ...
    (uk.rec.waterways)
  • Re: IWA Moorings Tender Petition
    ... afford to pay £500 a year for moorings and cannot afford £510. ... the moorings at the market price. ...
    (uk.rec.waterways)
  • Re: Duhhhhh!
    ... However THE OTHER MOORINGS ARE ... This is because the price achieved by moorings auctioned is *NOT* ... The market price is set by the highest bidder. ... The auction system secures the most money from the sale (in ...
    (uk.rec.waterways)
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