In response to my comments on One Red Paperclip project and the benefits of trade, Mark Baker wonders:
if there's any way to benefit from this asymmetry on a large scale?
But I'm not sure there is an asymmetry. Remember that both parties in each exchange value what they are receiving more than what they are giving. The exchange might look asymmetric to a third party but that third party might have different values than the two participating in the exchange.
Clearly it seems dramatic when you look at the start and end points but remember also that each step is with a different person. So say A gets traded for B which gets traded for C and so on to Z.
It's possible that every participant along the way could value Z more than A but still be perfectly happy with their individual exchange.
One might argue that the person giving up Z for Y might have accepted A on the grounds that they could have done the A, B, ... Y exchanges themselves but there is the transaction cost of discovery that the person doing all the exchanges has to bear. When you think about it, the person who started with A is doing a benefit to everyone along the way, even if he's just motivated by getting Z for himself.
I think one also needs to consider that the person who gave up, say, L for K might then go trade K for something even more valuable to them, so it's not just the people on the path from A to Z that participate in some sense.
The transaction cost of discovery might be very high and this might be the undoing of a project like One Red Paperclip. How does Mr Paperclip know that exchanging P for Q gets him closer to Z? Do the self-organizing benefits of a free market really come into play when there is one person essentially trying to coordinate? Finding the individual exchanges that would lead to a particular goal sounds like a job for the market as a whole, not one individual.
Wow. Mark's question opened up a whole bunch of thoughts. And I didn't even get to his second question about the long tail. I also didn't talk about arbitrage which presumably is relevant to all this. And eBay has got to factor in somewhere :-)
As I'm just an economics novice, I'd really like to get some of my favourite economics bloggers to post their thoughts on this. I'll email Tyler Cowen and Peter Boettke and link to their posts if they make them.