How To Sell a Tuna - What fish markets teach about the economy

[Leigh Meyers <the.buffalo.in.the.midst@xxxxxxxxx>]

Also.. 'The Mental Economy':
Industry against declaring video games addiction 'a mental disorder'
[...]
According to the American Psychiatric Association's report, up to 90
per cent of American youngsters play video games, and of them 15 per
cent (five million children) may be addicted.

The health insurance companies will be compelled to pay for treatment
of children suffering from video game addiction, should the pastime be
declared a psychiatric disorder.
[...]
<http://story.venezuelastar.com/index.php/ct/9/cid/1f5f6572907d15fb/id/258983/cs/1/>

Slate - Undercover Economist

How To Sell a Tuna
What fish markets teach about the economy.

By Tim Harford
Posted Friday, June 22, 2007, at 6:31 PM ET

Mmm. Fish.

Click image to expand.

Economists tend to study "the market" in the abstract, but some
markets are anything but abstract. The Aalsmeer auctions in the
Netherlands burst with the color of more than 20 million flowers a
day, while Tokyo's early-morning Tsukiji fish market is enthralling
enough to compete for tourist attention with the nightclubs of
Roppongi. (The stink of alcohol in the tourist pens of Tsukiji
suggests that many visitors have combined both experiences to make a
night of it.)

These celebrated markets deserve attention from economists as well as
tourists. A lot of economics assumes away the details of how market
transactions actually work. That is a shame; the late John McMillan,
an economist at Stanford, argued that markets will only work well if
they are well-designed. The whole idea of a market is to allow gains
from trade to take place; a badly thought-out market will often fail.

There is more than meets the eye even to a simple transaction such as
buying fish.

Economist Kathryn Graddy once spent a month shadowing a trader at the
Fulton Fish Market in New York, rousing herself in the early hours and
paying protection money to park her car in a safe spot near the
market. She discovered that market traders appeared to charge
different prices to different ethnic groups. In particular, Asian
buyers tended to win keener prices than white buyers. The likely
explanation was that the Asian buyers had more price-sensitive
customers in Chinatown.

Still, this was a surprising result.

A competitive market should eliminate the traders' ability to charge
white customers more, and the Fulton Fish Market should be
competitive: It is the world's second largest. (Tsukiji, more than
five times larger, is in a league of its own.) Graddy discovered that
even at Fulton, perfect competition was elusive.

Nevertheless, the better markets work, the more transactions they make
possible. Some transactions are so tempting as to be irrepressible,
much as we might want to repress them: Schoolchildren will be supplied
with chocolate bars whether or not the school shop stocks them. Other
transactions are inspiring in their resilience. In the chaos of
Mogadishu, Somalia, private merchants have worked out ways to get the
market for electricity to work without metering; customers pay
according to the number of bulbs in their home or workshop.

Yet many transactions require a lot more support than that. Modern
transaction infrastructure includes the legal system, credit
registries, Visa, and corporate accounts. Buying shares may not seem
very sophisticated, for instance, but when you buy a share you are
lending money in exchange for a claim on the future profitability of a
firm in, say, China.

This everyday financial transaction requires layers of accountants,
regulators, brokers, and lawyers to make it possible.

Much economic progress consists of reducing transaction costs to allow
more sophisticated transactions to take place. Although transaction
costs have fallen, modern economies are ever more consumed by them.
John Wallis and Nobel laureate economist Douglass North once tried to
tot up transaction costs by looking at the size of sectors such as
accountancy, law, retail, management, policing, and so on. They found
that the transaction-cost sector doubled its share of the U.S.
economy, from just over a quarter in 1870 to just over half in 1970.
Transactions don't come cheap, but since we were much richer in 1970
than in 1870, all this spending seems to have been worth it.

In full: http://www.slate.com/id/2168743/