Monday, February 25, 2013

So is it a buyers' or a sellers' market?

Good morning economists. It is no secret that the global recession has affected both firms and consumers to varying degrees. I would like to share a story which made me wonder whether the market is slowly but steadily becoming a buyers' market.

A buyers' market is a situation where supply exceeds demand thus giving the buyers or consumers bargaining advantage over the sellers. A sellers' market is the exact opposite. In that scenario, there is excess demand and suppliers can take advantage of consumers either by raising prices or by having some sort of advantage over negotiations.

A month ago, my vintage motorcycle was in need of service. I do have my regular mechanic that I always entrust to do a good job on the bike, however due to the recession his business has slowed down in the last six months. It came as a shock to me that it took my mechanic almost two weeks to service the bike. That is, change the oil and refill the fluid in the front springs. For anyone who is into motorcycles will understand that this is a three hour job!!!

The problem was that I could not cancel the deal since he started working on the bike on day one, by dismantling the front springs. So it was impossible for me to move to bike to another mechanic. I had to endure the delay despite my daily phone calls to expedite the work.

In a global market where there is arguably excess supply, I found myself falling victim of a sellers' market. In other words I was at a disadvantage over the negotiations for the completion of the work. I wondered at the time whether my mechanic really understood the concept of a buyers' market and the whole idea of excess supply. I guess the supplier still has some negotiating power in the case of services than in the simple sale of goods.

Have you fallen victims of a sellers' market recently?

Have a nice day!

1 comment:

  1. Hi, this is my first post here, awesome blog by the way,

    now there is one thing I didn't understand, I would think that if your mechanic's business has slowed down due to recession, then he would have less work, therefore more time available to work on fixing you bike. Why did he take so long to fix it?