Sunday, September 29, 2013

Race to the Bottom - Hunter Pence's 2006 Bowman Draft Future's Game Prospects Gold #18

Hunter Pence just inked a nice deal with the SF Giants, so let's pick on him and look at one of his earlier cards: 2006 Bowman Draft Future's Game Prospects Gold #18.

Jumping over to SportLots.com, we find 32 of these cards available, with the lowest price of $2.85.

Over at COMC.com, we find 35 of these cards available, with the lowest price of $0.70.

This a great example of arbitrage and how the baseball card market is inherently inefficient, and it is also a great example of a "race to the bottom" from the sellers.

On COMC, the five lowest-priced of these cards at $0.70, $0.71, $0.83, $0.84, $0.90 - a difference of only $0.20.

On SportLots.com, a similar pattern: $2.85, $2.89, $2.90, $2.99, $3.00 - a difference of $0.15!

The sellers have reason to collude and try to raise the price of the cards, but because the market is so open with an unlimited number of potential sellers who are obviously more than willing to undercut the prevailing lowest price the sellers will never be able to eradicate this downward pressure on the price.

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