Volume 36, Issue 4, April 2001
The Card Show
A Lesson in Supply- and-Demand
by Lyle R. Hill
Editors Note: After numerous requests, we reprint the following article, which first appeared in the August 1995 issue of USGlass.
The crowd looked larger than usual, but that was to be expected. After all Fireball Feller was going to be signing autographs. My then-ten-year-old son and I had been looking forward to this day for weeks. Where else could you go to have so much fun for so few dollars?
This was the first baseball show of the year, and it had become a tradition for me to purchase the years complete card set for my son, Pat. As had been our routine, I turned Pat loose to make his way through the dealers tables and to find the best price for the complete set of 400-plus baseball cards.
After about 15 minutes, Pat returned and announced that he had found the best price for the complete set of cards in aisle four. But there was something he couldnt understand. In aisle four, a box of 1984 Topps baseball cards could be purchased for $14. Right across the aisle, however, another dealer was selling the same set for $16.
A sign propped up against his stack of card boxes read $16 while they last! Pat tugged my sleeve and asked, Why would anyone buy his boxes of cards for $16 when right across the aisle you can get the same cards for $14? Is he trying to cheat people?
No, son, I responded in my businessman-of-the-world voice. He just doesnt understand the market. He hasnt properly analyzed his competition.
I think hes just stupid, Pat replied.
Here was one of those rare educational moments. I, a well-educated, professionally-astute businessman, had an opportunity to instruct my young son in the workings of the higher economic order of things. Watch this, I told Pat.
I looked down at the high-priced dealers nameplate. It read, Clydes Card Shop, Iowa. No wonder, I thought. What could you expect from some small-time baseball card dealer from the cornfields of Iowa? He could use some help, I thought. Hes in the big city now.
Pardon me, Clyde, I began, while my son watched me intently. Ill offer you $14 for one of your complete sets. I pulled out my wallet and laid exactly $14 on his table.
Sorry, Clyde replied, but my price is $16. He seemed to take a kind of pride in his position.
But Clyde, dont you realize that dealers all around you are offering the same product to the same potential group of buyers at $14? Why, Ill bet you havent sold a set yet! Dont you understand whats going on? Have you no business acumen?
Clyde, I continued, you obviously dont understand the competitive forces that are at work here. Have you never heard of supply and demand? You cant sell for more when the competition is selling for less!
Well, mister, Clyde replied patiently, you may be right, but I dont think so. In fact, I truly believe that by the end of the day, Ill sell all of my sets, and Ill get my price of $16 in spite of what anyone else sells em for. And Ive got a hundred of em to sell.
My young son looked up at me awaiting my response. Clyde I laughed, if you can sell all of your 100 boxes of cards for $16 while the world around you sells theirs for $14, Ill buy that overpriced Sandy Koufax card there in your show case for your asking price.
Clydes eyebrows raised, he smiled and said, Ill see you at five oclock, and bring your wallet!
Pat and I bought our set of cards from Clydes competitor across the aisle for $14 and went to stand in line for Bob Fireball Fellers autograph. We spent a pleasant afternoon perusing the stock of the various dealers. At 4:45 p.m., we wandered over to Clydes table. Much to my surprise, he only had a few sets left, and there was a line of people waiting to buy them. His sign had been turned around and now read, 1984 Topps sets $17 each while they last.
I stepped to the head of the line and said, Clyde, this is incredible. How did you do it? Well, Clyde replied, I knew Bob Feller would mean a good turnout, and I overheard some of the dealers saying they wished they had brought more merchandise. And I knew the company that makes the cards was behind on delivery and some dealers only had a few sets to sell. So I figured it was just a simple case of supply and demand. By the end of the day, Id have the only supply and could demand pretty much whatever I wanted for it. Ive been at this for quite awhile now, and the guys that dont seem to make it in the long run are the guys that are first to drop their price for fear of losing a sale. And you know, we dealers pretty much all pay the same price for our merchandise, so even if I hadnt sold out I still would have been ahead selling fewer sets at the higher price.
Clyde was right. He had sized up the marketplace, the buyers, the sellers, suppliers and competitors. He sold his product at a fair price while refusing to chase the volume-hungry, low-price competitors.
So Clyde, I said, what do you do when youre not selling baseball cards?
Im a professor of economics at the university back home. By the way, he went on, will that be cash or charge for Mr. Koufax?