This is ofcourse oversimplified, but I think it holds some truth. Let's create the following fictionial, but not unrealistic, situation:Uknown backpacker said:While walking around I was stopped by a guy selling little drums. I quite fancied them so I asked how much. He wanted 5$. That's virtually for free, I could buy twenty of them with the money I had in my pocket! I knew it was normal to talk the price down, but I hated that so much. I did a quick attempt and got the price down to 4$. Hey, what's 4$ to me anyway? And the salesman looked happy!
A few moments later a man came to talk to me. He introduced himself as a professor at the local university. He had seen how I bought the drums and he was quite upset. He asked me if I know something about economics? "Sure", I answered, after all I studied economics at school. He then went on to explain me a bit about the simple principle of supply and demand.
- The real value of the drums is 0,5$. And expensive item for local people, but if they saved up they could just afford one.
- I had now bought a drum for 4$. The salesman was really pleased with that. He also saw that this western tourist gladly paid it.
- If that salesman could sell 1 drum to a western tourist, he would earn 8 times more then if he would sell it to a local. The idea of selling locally suddenly became a lot less attractive!
- Because of the principle of suply and demand, the value of that drum was now 4$.
- Local people could not afford to spend 4$ on a drum. They would no longer be able to purchase one.