If you have gone to South East Asia, you will see night markets; they are markets which sell goods, foods, and junks, and they're the penultimate all-you-can-get locations which become available weekly, only at night, and only on some weekdays.
In CIS 2019, we gone to some night markets in Thailand.
It was a beautiful experience there. We get to eat some great foods, buy some great stuff, only with less than a dollar. 300 Baht is approximately $10; with that, you can literally experience every single food in the market.
We also went on a Cambodian market the night before. It was equally nice, except I almost got catted in by a lady trying to get me to have a massage at her place, to which I ran straight off her grip.
Anyways, what common in night markets I went on is that a lot of them sell the same thing. This was a particular thing with the Cambodian one; they sell T-shirts of the same styles, and because variety is narrow, it's hard for us night market tourists to identify something that's so new. We have asymmetric information; we just can't go every place in the night market, because it's time-consuming, so a lot of us tend to go and buy, with no further considerations
Another part in the lack of information is that we won't be able to inspect prices either.
However, I, an IB Economics HL student, took my swords to practice, without having to sharpen them, because I have much more stuff in summer than just study.
Night market shops are perfectly competitive
To those who don't know, a perfectly competitive market is a market that has 4 characteristics:
1. Everyone sells pretty much the same products
2. There are many firms
3. Firms are price takers i.e they have no control over the price
4. Market agents have perfect info about price
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Ok, that last one is lacking
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We simply don't have time to go around checking every store if they have our shirt and at what prices, but we can attempt to. Now, I will not count bargaining, because that's a whole different matter. I will count how we come in, ask for the price, and go; if the seller decides to change the prices suddenly because he/she might see our hesitations, then that counts.
Since there are many shops, they have no control over prices, simply because products are identical, and thus consumers will have reasonable substitutes. Ideally, they have a perfectly elastic demand. Practically, they expect to virtually lose all customers by raising prices.
When I went to the Cambodian market, one shop sold L-sized banana shirts at $5/piece, and my friends in the #vangang decided to buy them. They had a big loss, because I went on deeper into the market for other shops and found out they all resides around $3/piece. The texture of my shirt is richer as well, due to the bananas being more yellow-hued. I told them that they have to use economics in real life to keep your cash from flying 💸
The lesson here is:
We may lack perfect information about price in night markets, and we need to exploit as much information as we can, by checking for substitutes
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