One day earlier in his career Dall was in the market to buy (borrow) 50 million dollars. He checked around and found the money market was 4 per cent-4.25 per cent, which meant he could buy (borrow) at 4.25 per cent or sell (lend) at 4 per cent. When he actually tried to buy 50 million dollars at 4.25 per cent, however, the market moved to 4.25 per cent-4.5 per cent. The sellers were scared off by a large buyer. Dall bid 4.5. The market moved again, to 4.5p per cent-4.75 per cent. He raised his bid several more times with the same result, then went to Bill Simon’s ofﬁce to tell him he couldn’t buy money. All the sellers were running like chickens.
“Then you be the seller,” said Simon.
So Dall became the seller, although he actually needed to buy. He sold 50 million dollars at 5.5 per cent. He sold another 50 million dollars at 5.5 per cent. Then, as Simon had guessed, the market collapsed. Everyone wanted to sell. There were no buyers. “Buy them back now,” said Simon when the market reached 4 per cent. So Dall not only got his 50 million dollars at 4 per cent but took a proﬁt on the money he had sold at higher rates. That was how a Salomon bond trader thought: He forgot whatever it was that he wanted to do for a minute and put his ﬁnger on the pulse of the market. If the market felt ﬁdgety, if people were scared or desperate, he herded them like sheep into a corner, then made them pay for their uncertainty. He sat on the market until it puked gold coins. Then he worried about what he wanted to do.
In calculus terms, it would be like taking a derivative of the Amazon marketplace and operating on different rules than most or all buyers and sellers on the marketplace.
The trick is minimizing your risk and making sure to adhere to Amazon's terms. [Does the scenario in the grandparent comment go against Amazon's terms I wonder?]
The ability to push the price down gives informed actors some pricing control on the market, and the subtext is that it allows for folks to push around pricing to understand the elasticity for any product. Now if you can get them to buy a 'put' of your product :-)
I'm not a lawyer, but I've worked in the financial sector and undergone FSA mandated training courses on what you can and can't legally do with equity pricing. What the OP was suggesting is an illegal practice in most equity markets.
In stocks, there's almost always someone willing to buy and someone else willing to sell at any given price, so how are you going to drive the price down without selling stock?
...always like there's always people willing to buy books at amazon?
However, I'd imagine that in just as many cases, if not more, there is no real "actual value" -- only computers playing with each other.
I wouldn't expect this to last very long, but you could potentially take advantage of it while it does by simply identifying seller's who lack limits and posting products within their categories at super low prices then buying them out and re-listing.
Eventually all of these scripts will have guards in them for upper and lower and probably limits on the percentage change over time.
It gets worse: When I finally did find a seller who allowed me to order the part, they accepted my order -- and then came back later saying that, oh no, actually they didn't have it either, but would I like to convert my order into an order for something else? (Fuck off.)
I still don't have the part.
The thing is that while these automatic pricing scripts exist, they aren't in enough widespread use to do what you're suggesting.
So no unlimited risks there.
Not to mention that in order to make money over normal practices, you have to a) find books that are being sold at less than wholesale price (~60%ish RRP), and b) find a book that no-one wants to buy at your competitor's super-cheap rate that they will buy at your more expensive one - you're going to have to be in for the long haul to do this.
It's not unethical because the buyer in this case can't really buy up all of the supply and therefore is just looking for arbitrage opportunities or opportunities to exploit weaknesses in a competitors business model.
The opportunities, over time, are very limited though:
1) You can't actually buy up all of the supply. If you were able to buy all of the listed supply and then reset the price you'd soon attract other sellers who had previously unlisted supply.
2) If there was real demand for an extremely high priced book I'd guess the author or publisher would be releasing a new version to meet the demand.
3) Although some printing of books are considered to be collectible, that market is limited. Generally the value of the book is the information it provides, which means that as the price rises the (perhaps less informative) substitutes become more appealing to buyers.
4) If you exploit a competitor's pricing algorithm enough to make them notice, they'll just change their algorithm. In this case, perhaps they don't sell you the books or they don't respond to your prices.
You might be able to make a few bucks on this strategy, maybe a few people could even eke out a living, but it would be risky... they'd earn it.
The calculations would have to consider the probability of not getting the book under the price of sale, the probability of not getting it over price of sale (investing the difference in avoiding a bad rating), and the chance that you won't receive a bad rating just for reimbursing it under whatever excuse. You can also ponder taking a bad rate eventually.
In other markets you'd have to basically get the book at any cost, which would make it really risky.
Maybe if you have a slightly bad reputation on Amazon that will keep people from buying your book. Maybe you can purchase the book locally and send it to the buyer in a pinch. Maybe you can purchase the book from the actual seller and just use the buyer's shipping address. Etc.