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Is this possible or how is it impossible?

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fakename posted on Sun, Feb 6 2011 7:59 PM

Is it possible to buy your own goods and so raise its price so as to make a profit? If this is so, then can some transactions be based on human artiface? What prevents most of  transactions from occuring this way?

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Well, the issues at hand:

If you already own them, why would you buy them?  How would that help you raise the price?  You still have to set a price for the initial sell, so this is really creating an extra step.  Just sell for more if you think you can get more.

 

If you are buying them BACK from others, when the mass buyout is perceived, the price is going to go up for you before you can turn around and make a profit, which is unlikely as you will be back at square one, having to find the highest price people are willing to spend that still fetches a profit considering an investment.

 

Consider a popular video game.  Your company goes on a spending spree, perhaps buying the game back at fifty percent of its value after the first year.  When your company's demand is observed, those willing to part may start demanding higher prices, and many will hold on to their copy to fetch a greater price, or because they value it as something to keep.  You might be able to resell at a higher price initially, as competitive buyers will certainly try to cash in on the rising price, but once the perception is that you are selling rather than buying, your demand falls, and the sellers will perceive this in the larger availability of the product and the inability to sell, so the price will be bid down.  It might be possible to trick the various buyers and sellers in the short term for a small profit, but this is more a gamble than it would be to just sell the product at the price the market is willing to buy at.

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Lyle replied on Sun, Feb 6 2011 9:52 PM

The value (subject to demand) of the product prevents transactions from occuring this way.  It is possible to give the perception, by buying one's own stock, that one's product is in high demand, but the truth will out eventually.  Garret Garret's novel "The Driver" suggests exactly what you suggest here, inducing demand or the perception thereof. 

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There is perhaps one area I can think of where this actually may happen (though for somewhat different reasons): the music industry.  Record companies supposedly buy up a lot of their own stock.  This makes their product appear popular, inducing radio stations to give their artist air-time.  From this relatively cheap advertising, the company then has a larger amount of customers.  This is of course not done to raise the price, and I'm not even sure how common it is.

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After reading the responses so far, I must ask, where is the profit supposed to be made? Is it when the seller buys his own product, or is it when afterwards once the sellers resales the stuff he bought?

To paraphrase Marc Faber: We're all doomed, but that doesn't mean that we can't make money in the process.
Rabbi Lapin: "Let's make bricks!"
Stephan Kinsella: "Say you and I both want to make a German chocolate cake."

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