Wednesday, 16 March 2011

The law of demand

Price really does matter. A nice example from the Carpe Diem blog:
MOGADISHU, March 13 (Reuters) - "Somali pirates said they would lower some of their ransom demands to get a faster turnover of ships they hijack in the Indian Ocean. Armed pirate gangs, who have made millions of dollars capturing ships as far south as the Seychelles and eastwards towards India, said they were holding too many vessels and needed a quicker handover to generate more income."
If you charge too much people just won't buy. I do wonder what the own price elasticity is for hijacked ships.

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