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We rarely seem to discuss the most basic kind of market failure: insufficient liquidity. Just not enough buyers and/or sellers to make a market. Any good writings exploring this, preferably essays over books?
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How are you differentiating this from insufficient demand? Made me think of pink sheet and BB markets - stuff that doesn’t qualify for proper listing bc most of it is junk.
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Trying to get the kids phrasing right. Climate action would be an example. If we wait till demand develops it will be too late for a lot of damage prevention. Impossible lag problem.
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Didn’t phrase this quite right. Don’t mean to pose a tautology as a failure. More like a ‘tragedy of liquidity’ or something. Demand emerging too late or too rarely for example but being acute and impossible to meet when it does. twitter.com/vgr/status/971
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Inefficient liquidity also could happen if demand and supply are high? If there are barriers by human (regulations) or nature (disaster halting market..).