Newsgroup Markets
Visit one of the following newsgroups:
(Newsgroups provide lists of messages on a particular topic. Google provides a searchable interface for these newsgroups.)
- rec.antiques.marketplace
- rec.audio.marketplace
- rec.music.makers.marketplace
Questions:
- Do participants in such lists receive gains from trade? How?
- Does the existence of internet newsgroups such as these allow some individuals to gain from trade that might not otherwise occur? Explain.
Solutions:
- Yes. Sellers are willing to sell a good only if they prefer the alternative goods that the money can buy to the good that they are selling. Buyers will buy a good only if the good is worth more to them than other things that could be purchased with those funds.
- In a world of imperfect information, there are costs associated with trying to find buyers or sellers for an item. This is particularly true for items for which there are few buyers and sellers in a particular geographical region. The low cost of receiving and transmitting information through these internet newsgroups, however, makes it possible to match buyers and sellers in distant locations who would not otherwise be in contact. Thus, this low-cost information service increases the total gains that are received through trade.
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