The core idea
A trade happens whenever a buyer's valuation exceeds a seller's cost and they can agree on a price between the two. Every question in the course — market power, elasticity, regulation — rests on this one mechanism. Understand it and you understand why markets exist; miss it and you will always be shouting at prices. — after Myatt
The hero diagram
Broker-mediated trade.
Buyers and sellers with private information. The broker matches them.
Mechanisms worth naming
The levers in the machine.
How to apply
Any real-world deal you are running.
- State the buyer's valuation. What would they pay at most?
- State your cost. What is the lowest you would accept?
- Locate the price. Somewhere between the two. Bargaining power decides where.
Key reading · Production Choices in Frictionless Marketplaces · Myatt & Galeotti
What a frictionless market looks like.
No real market is frictionless — but every real market gets read against one that is. That is the whole point of the benchmark: it tells you where the friction sits, and how much of your margin lives there. Supply, demand and equilibrium prices all start from this reference, then deform.
Start with how a price emerges. Everything else is perturbation.