In Belarus, the government doesn’t allow trading of its ruble outside a narrow price range, which greatly overvalues the ruble— so there is a price floor on the ruble compared to the euro or dollar. Because of the floor, currency trading had dried up: who would want to sell foreign currencies for grossly overpriced Belarussian rubles??
A friend of one of my students has a website designed to overcome rigidities in this market, sort of a Craigslist for currency. People specify amounts willing to buy or sell, agree to trade at some price and arrange a meeting place (often one of the empty currency-trading booths!). When they meet, trade nominally occurs at the official price floor, making the transaction nominally legal; but the person selling rubles makes side payments to the buyer to lower the price sufficiently so that the trade actually takes place at the equilibrium price.
One more way in which technology helps markets circumvent imperfections and rigidities.
(HT to MK)
In our latest Freakonomics Radio podcast, “Where Have All the Hitchhikers Gone,” we looked at how hitchhiking is essentially a market. Specifically, as Levitt puts it, it’s a “matching market” where supply (a person who’s willing to give a ride) matches up with demand (a person who needs a ride) in natural equilibrium. Over time, that equilibrium, as facilitated by people thumbing on the sides of roads, eventually vanished.
But the supply remained; actually it increased — as the average number of passengers in a car during the work commute went from 1.3 in 1977, to 1.1 today. (Click here for more data.) And as gas prices have steadily risen, and the economy flat-lined, the demand has seemingly come back. Enter the Internet as the new facilitator.
As many of you have pointed out in emails and comments, an entire online ecosystem of ride-sharing ventures has cropped up in the last few years. So here are the highlights: Read More »
As people who hate meetings, we were particularly taken with one paragraph from this wonderful piece on the unlikely success of Craigslist. Read More »
Not long ago, Levitt wrote about a Craigslist posting in which a woman solicited advice in marrying a man who made more than $500,000 a year. That posting eventually made the international media rounds, from the Times to the BBC News to Scientific American. But journalists have yet to jump on the wealth of posts […] Read More »
Students fight for the right to file-share. (Earlier) Headhunters see spike in lies on resumes. Is Craigslist inadvertently prolonging the Iraq war? (Earlier) Why are so many good kidneys going to waste? (Earlier) Read More »
Courtesy of Craigslist Last week, you submitted lots and lots of questions for Craig Newmark and Jim Buckmaster, the founder and CEO, respectively, of Craigslist. They couldn’t answer every question but I think you’ll agree they’ve given us a lot of good answers, time, and ideas. I was particularly intrigued by Jim’s statement that investigative […] Read More »
Raise your hand if you’ve never visited Craigslist. Just as I thought: I don’t see many raised hands out there. In my opinion, Craigslist is one of the most revolutionary elements of the Internet revolution: simple, scalable, useful, powerful, and therefore omnipresent. So I am very happy to announce that Craig Newmark and Jim Buckmaster, […] Read More »