CHAPTER 11
Why Transaction Costs Eliminate the Price Space Most of the Time
In Economics 101, we learned about supply and demand curves for products and services. “X” marked the spot where the supply and demand curves crossed, and this determined the price and quantity of the product to be exchanged. It was simple.
TxCs might have been touched on as something that one might need to consider in drawing the curves. But no one made it clear that TxCs destroy the potential for exchange almost 100 percent of the time. The true supply and demand curves rarely crossed, because the demand curves fell away down to the left and the supply curves moved up. Thwarted exchange is like the dog that never barked: it doesn’t happen, so we never think about it. ...
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