Economics

The Price Is Right?

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blago

If you're going to sell a Senate seat, Blagojevich (if that's even your real name), at least try to get the right price for it. Leigh Caldwell of Knowing and Making offers several methods for determining the correct price.

From Method #2: Market Price:

We believe that one candidate was offering $500,000, another was offering $1 million and a third was offering "nothing but appreciation". We don't know what the President-Elect's appreciation is worth, but apparently it's less than $1 million. Given that there is a monopoly supplier of this position and a limited number (1) of the commodity available, the highest price offered by any buyer is the one that will clear the market. So on this method, $1 million is the answer.
Read the whole thing to get the discounted cash flow and marginal returns methods.