Monday, January 9, 2017

Gas Buddy and Smart Card solve a pricing issue

Via Crooked Timber we see research about price setting in Germany using an app that collects and reports prices to retailer gas outlets:
… a German software application that tracks petrol-pump prices. Preliminary results suggest that the app discourages price-cutting by retailers, keeping prices higher than they otherwise would have been. As the algorithm instantly detects a petrol station price cut, allowing competitors to match the new price before consumers can shift to the discounter, there is no incentive for any vendor to cut in the first place.“Algorithms are sharing information so quickly that consumers are not aware of the competition,” says Mr Stucke. “Two gas stations that are across the street from each other are already familiar with this.” This episode suggests that the availability of perfect information, a hallmark of free market theory, might harm rather than empower consumers. If the concern is borne out, a central assumption of the digital economy — that technology lowers prices and expands choices — could be upended.

My title has the answer.  TAP your card on the Gas Buddy icon and your card will enroll in the gas quantity management program. The card then monitors the distribution of gas prices in your commute range.  It can tell you the optimum number of gallond to buy at any given gas station, it shows either red, buy less, or green, filler up.

The sellers and buyers the have equal access to the 'book, their shared risk is equally observable. At equilibrium, everyone commutes to work with the fewest number of gasoline stops. The whole of them are forced to agree, the basket size for fuel is one gas tank. 

This is borne by experience, our experience tells us the gas station lines are very efficient, seldom more than one or two cars per pump at any given timer. And it is mostly filler up, or something very close.  Trading technology gets shared between buyer and seller sooner than later.

Let's go through the layered distributions
Gas Buddy known the distribution over some region, and the Gas Buddy and the App generate a distribution over your typical driving pattern. Your pure cash function will grab the latest distribution whenever it is on net.  It will grab it via yhe Gas Buddy app, a taper proof link.  So, examine the set of gas delivery trucks and commuters, on the road, aty maximum entropy.  Each of them can 'read the book' to the same accuracy.  At maximum entropy,each of the drivers and commuters, can reach the optimum transaction size, in quantity, there would be no more efficient method to distribute fuel within the given set of vehicles.  There would actually exists a virtual  S&L, a node in the local banks that seems stable.  The credit managers looking at all the master charge entries would say, "Oh yes,those are commuters buying gas, quite  regular channel."

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