[OPE-L:6452] What is prior?

Gerald Levy (glevy@pratt.edu)
Fri, 10 Apr 1998 13:18:33 -0400 (EDT)

Alan wrote on Fri, 10 Apr:

> > When you walk into the shop and see the cauliflowers on sale for $1 you
> > don't know whether the store owner has set the price of $1 artificially
> > high with the expectation that the bargaining process will drive the price
> > down. In other words, you don't know whether s/he expects to sell the
> > cauliflower for $1 , $0.50, $0.25 or anywhere in between.
> Sure. which only tells us that the price changes constantly. Which is why
> when recording any price we have to specify it as the price of a definite
> moment in time. If the cauliflower is priced at $1 at 10am, then that's its
> price at that time. If it sinks to $0.40 by 4pm, then that's its price at
> that time.

No, I think it tells us something more. It tells us that the price listed
for many commodities may be purposely inflated since the seller expects to
decrease the price in the sales process. In other words, the so-called
"list price" may be, and often is, a fictitious price that the seller has
no intention of selling the commodity for. Yet, if at a single moment in
time we added-up all of the prices for commodities in the manner you
suggested in your post on Wednesday, we would also have this fictitious
component that would inflate the aggregate price level.

How can we get around this? Only by adding prices ex post. Then we _know_
what market prices were.

> If it's sold for $0.30, then that is its price at the time of sale. >
> This is exactly the way that, for example, commodity prices are recorded in
> the commodity exchanges. That's what ticker tapes are for, except now they
> do it with screens. At any time, check the screen, and you see a list of
> prices. These are the prices of that moment.

Right. But my point is that the listed prices are different from the
market prices.

In solidarity, Jerry