If we’re talking about efficient price discovery, it doesn’t apply to necessities. Supply and demand doesn’t just mean “Some people sell things, other people buy them”, it refers to specific emergent dynamics in markets. One of the essential parts of supply and demand is the ability of the consumer to abstain from a purchase which is more expensive than they’re willing to pay.
iPhones don’t cost $10,000 because if they did, most people wouldn’t buy them. This doesn’t work for things you need, like housing or medicine, because you can’t just choose not to buy them, no matter the cost. That removes the downward pressure that validates supply and demand curves.
If we’re talking about efficient price discovery, it doesn’t apply to necessities. Supply and demand doesn’t just mean “Some people sell things, other people buy them”, it refers to specific emergent dynamics in markets. One of the essential parts of supply and demand is the ability of the consumer to abstain from a purchase which is more expensive than they’re willing to pay.
iPhones don’t cost $10,000 because if they did, most people wouldn’t buy them. This doesn’t work for things you need, like housing or medicine, because you can’t just choose not to buy them, no matter the cost. That removes the downward pressure that validates supply and demand curves.
Is this not simply covered by elasticity? E.g. if housing was $50,000 a month, most people would be homeless, even if it is a “need”.
At a certain level of inelasticity, the self regulating aspect of supply and demand becomes basically irrelevant.