We vote with our wallets by making purchases at Walmart or elsewhere. And Walmart and competitors will then apply their own calculations to maximise profits( or perhaps sales, depending on their strategy), revising prices over time.
This process is repeated until the Walrasian auctioneer lands on a set of prices that clears the market- that is where an equilibrium is reached in which consumers receive the best selection of goods and services based on their preferences and budget, and sellers get a competitive income.
This“ Walrasian equilibrium” might sound very much like the way prices at supermarkets and online stores come about. Anticipated prices are constantly tested as buyers choose where to spend their money and suppliers allocate their resources to producing goods. It is an ongoing, invisible dance( an auction) we’ re constantly engaged in without thinking much about it.
The arrival of Walmart in South Africa provides a living example. Although no explicit auction is involved, the Walrasian scenario is at play. Walmart has announced prices for all of its goods.
We vote with our wallets by making purchases at Walmart or elsewhere. And Walmart and competitors will then apply their own calculations to maximise profits( or perhaps sales, depending on their strategy), revising prices over time.
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