Wednesday, October 28, 2009

Unseen Co-operation

The co-operation we see in the economy without explicit direction is indeed quite impressive when it works. However, there are times when it fails to satisfy our wants either through inefficiency or lack of ingenuity. If I want a loaf of bread the system works. I can get in my car, go to the bakery and get a freshly baked loaf of bread within minutes. But, if I want a doughnut with strawberry frosting and rainbow sprinkles I could spend days looking in south central or the interior and find nothing (I have heard rumors of a place in Tok. I guess that is next). I really want this doughnut and would be will to pay quite a bit to get one. However, the Alaskan market for such a good does not seem to exist. In this instance the economy has failed. I suppose the internet and the creation of online shopping can help correct for these thin geographic markets but who wants to eat a doughnut that spent three days in the postal system.

It could be argued that this is not a failure because substitutes exist which generally give me the same level of utility. Unfortunately, in this instance no substitute will do. The all taste like disappointment. It has to be a strawberry doughnut with rainbow sprinkles. Every bakery or dounghnut shop I walk into is perplexed by the inelasticity I have for this good. However, my rational should not need to be explained. All that the market needs to know is that I DEMAND this good and with this great invisible co-operation I should get it. I guess this instance is the exception rather than the rule. The system works 99% or the time and in every instance which really matters (Shelter, water, food, etc). But it has failed to satisfy my slightest whim and that makes me a dissatisfied economic actor.


  1. Where you get it or not depends on one, perfect information and if you offer a price high enough to create producer surplus and profit. Perhaps your willingness to pay is large when compared to substitutes yet to small to create a profit for the producer.

  2. You could always start your own bakery that sells exclusively strawberry doughnuts with rainbow sprinkles and take market share.

  3. I take both your points but what I was attempting to derive from my post is that I would have to make a substantial "conscious" effort. To become a planner by starting a bakery or issuing a call for these to be produced. Even though they exist they are not provided subconsciously by the market. Or the Alaskan Market rather. The closest I have come to my doughnut dream is a strawberry doughnut with Skittles and I lost a little faith in the human race.