Pete Rose provides a lesson in basic economics
Some time ago Pete Rose signed a bunch of baseballs with the inscription “I’m sorry I bet on baseball.” According to media reports, he gave these balls to friends and never intended them to be sold for profit.
But the estate of one of the collectors who received the ball decided to put 30 of them up for auction. There was speculation that these balls would sell for a huge amount of money.
That is when Pete Rose stepped in and delivered one of the fundamental lessons in economics: as long as there are close substitutes available, prices can’t get too high.
When Pete Rose heard that these balls were being auctioned, he offered to sell balls with the same inscription on his web site for $299, effectively destroying the market for these balls that were going to auction. (Note, the newly signed balls won’t be perfect substitutes for the old ones because a collector can still say he had one of the original 30. For that reason, you wouldn’t expect the auction price of the old balls to fall all the way to $299. Indeed, the auction was called off and the balls were sold for $1,000 a piece).
(Thanks to John List, the only baseball memorabilia salesman turned economist, for telling me about this.)