I bet Pete Rose never fancied himself as an economist. Speaking of betting…years ago, Pete Rose decided to sign several baseballs “I’m sorry I bet on Baseball.”
He never intended them to be sold for profit. Instead they were simply given out to friends.
As reported by members of the media such as ESPN, the estate one of the friends had other ideas. A decision was made to sell 30 of them at auctions after figuring each ball could sell for thousands of dollar. Speculation soon followed on how high the price could be.
Steven Levitt one of the fine individuals at Freakonomics, wrote in his article
That is when Pete Rose stepped in and delivered one of the fundamental lessons in economics: as long as there are close substitutes available, prices can’t get too high.
When Pete Rose heard these balls were being auctioned, he decided to sell baseballs with the same inscription on his web site for $299. Thus he destroyed the market for these balls being auctioned.
The auction was called off but the friend’s estate still managed to sell the 30 balls for $1000 each. That because they were marketed as the “original collector” balls. Pete Rose had successfully limited the primary market’s potential home run, to a solid single.
