[meteorite-list] Meteorite economics revisited

From: Adam Hupe <adamhupe_at_meteoritecentral.com>
Date: Thu Apr 22 10:32:45 2004
Message-ID: <00fd01c4013e$dcc64d00$62f61018_at_attbi.com>

Dear Rob and List,

This could prove to be a good subject for friendly debate.

In response to this question asked on the previous post.

"When someone offers material at a fire-sale price, I fail to see how
that hurts other sellers of the same material. After all, what's to
stop those sellers from simply buying-out the "rogue" seller?"

In this case, the so-called "rogue" seller was not willing to honor the
publicly made offer to anybody who put in a large order, in other words it
was more for show. The public perception then became that this material has
now dropped in price to a certain level even though in most cases it was not
being honored at that level. This caused problems for honest dealers trying
to protect their investments. Perceptions are very important as anybody who
runs a business will tell you.

Another point is that even if the "rogue" party was willing to sell to
another dealer at half his initial costs. The dealer would have to
dollar-cost-average down his inventory never reaching the break even point
due to the limited amount of material. Why should the honest dealer shell
out more money when he already has a considerable amount invested?

"Why, yes - no damage at all. Meteorite dealers don't set prices --
buyers do. Since meteorites are a non-essential commodity, if the
price is too high, people simply go without."

That is why I used a birthday fall as an example. If one source was in
control of an entire fall because others felt it was not worth going after
than they could ask anything they wanted. Say a few collectors wanted the
fall very badly because it landed on their birthday. My guess is if they
could afford it they would pay the unreasonably high price. Say two dealers
had the same fall. Then the price would be in check because if one dealer's
price was two high then the collector could always approach the other
dealer.

Yes, dealers sometimes do set the prices. It then becomes a matter of trust
for collectors that they are not paying too much. The standard business
supply and demand argument only works for true commodities not for
meteorites in all cases. This is because no two falls are alike just like no
two pieces of fine art are alike. Is fine art a commodity in the business
sense? Do investors buy futures on meteorites or fine art?

Just some more thoughts,
Received on Wed 03 Mar 2004 11:44:56 AM PST