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By definition, ROI is a fraction with "return" in the numerator and "investment" in the denominator. It being high could mean returns are high OR bribes are cheap, but either way that means it's a buyer's market. You're essentially arguing that if potatoes are cheap and a great deal for shoppers then farmers can charge more money for potatoes. But if there's tons of potato farmers around and not many people buying potatoes then anyone who tries to raise prices will get outcompeted by their rivals.
Ok, @crushedoranges made an easy-to-understand mistake, but you're specifically trying to be a pedant and correct my correction. You really should have taken a few minutes to think this through first. (And this from an account called "MathWizard"? Really?)
If ROI is high, then more people will want to buy. That's what makes it a seller's market. In an ideal marketplace, prices rise to equilibrium (where perceived value = price). Your example is incoherent - in an efficient market, potatoes being "a great deal for shoppers" is not compatible with "not many people buying potatoes."
To use a pithy example, if we're selling $100 bills for $1, then the ROI for customers is 100, ridiculously high. If the guy next to me has 10 to sell, and I have 10 to sell, and I foolishly decide not to listen to a "MathWizard" and to sell them at $2 instead ... do you think I'm going to have trouble finding buyers?
The point is that it's NOT an efficient market. For some reason fewer people are investing in politics than you would expect, therefore prices have dropped and dropped until the ROI has gotten as high as it is.
Politicians offer $100 in however many years for $90 now, no one buys. Politicians offer for $80 now, no one buys. Politicians offer for $50, a couple people buy but not many. More politicians come along and the price eventually equilibrizes at $20 until enough companies start buying so that the number of buys and sells match up.
That's a buyer's market. You can't sell your $100 bill for $90, even though it's $100, because everyone else is selling for $20. For whatever reason there aren't enough buyers waiting to snatch it up. A buyer's market is defined by having high ROI for the buyer. If it was a seller's market and they could sell for $99 then ROI would be LOW, because ROI is defined as the return "to the buyer", not to the seller.
Ok, this has been an extremely frustrating thread. I'm going to try and take a step back, unilaterally disarm, and try to figure out how we got here.
I believe I misinterpreted @crushedoranges at the start. To paraphrase, what he meant was "ROI is extremely high, which is evidence that this is a buyer's market." Upon rereading, that makes more sense, and is what you and @whatihear have been defending. But (as I stated multiple times) I interpreted it as "ROI is extremely high, which leads to this being a buyer's market." Flipping the implication makes the sign incorrect (and "the market is inefficient" is not a fix).
I could nitpick your phrasing, but I've already wasted enough of everyone's time. I basically agree with your and @whatihear's latest posts. I hope we're all on the same page now.
Mea culpa, I did not phrase it very well and your read was completely understandable.
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You are assuming that demand is infinitely elastic. It is quite possible that there are just not many marginal new buyers of potatoes even if they are a great deal. Demand being inelastic would not free the farmers from competition and allow them to raise prices.
What did I do to deserve this thread? Yes, Generic Economic Trope #1 is that markets aren't always efficient. That's why I, y'know, explicitly said "efficient" in my post. It's irrelevant to the main point. "ROI being high makes it a buyer's market" is factually incorrect. The effect goes in the exact wrong direction. You don't get to say that "if my product becomes more valuable, I'm less capable of raising prices, because something something INELASTICITY."
Market efficiency generally refers to pricing correctness. I don’t think it has much to do with elasticity of demand or supply.
“If ROI is high then more people will want to buy,” is generally true, but it’s not a priori true. We have to know something about the demand curve as well. Most of the time, it will generate a sellers market and allow sellers to raise prices, but it doesn’t have to happen immediately. In the case of political bribes, the market is intensely opaque and potential buyers might not realize how to make a purchase or may not want to buy for silly reasons like honor. Over the long run I would expect more buyers to clue in, but it wouldn’t surprise me if bribes could remain really high ROI for a long time without changing market conditions much. Certainly I wouldn’t expect it to move as fast as oil futures.
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