dcollins
Explorer
Janx said:But the rules of Supply and Demand always apply.
From Wikipedia (http://en.wikipedia.org/wiki/Supply_and_demand):
Criticism of Marshall's theory of supply and demand
One theory counter to Marshall is that price is already known in a commodity before it reaches the market, negating his idea that some abstract market is conveying price information... This would mean that the producer creates the goods without already having customers — blindly producing, hoping that someone will buy them... Modern producers often have market studies prepared well in advance of production decisions...
In other words, "supply and demand" may be a legitimate analysis for modern markets with lots of information about pricing, but possibly not for pre-modern markets with less well informed buyers and sellers.