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Old 10-10-2010, 07:36 AM
benjulmag benjulmag is offline
CoreyRS.hanus
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Join Date: May 2009
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As I see it, Heritage is in fact "paying" a BP for items it buys itself even though it is paying it to itself. The reason is opportunity cost. Say it buys an item for $10,000. The BP would be $1,950. And say the underbid was $9,500. The BP for that underbid would be $1,852.50. By buying the item itself, Heritage is forgoing that $1,852.50. That forgone BP is a real cost to them, an opportunity cost in economic parlance. Even though it is real, though, it is less that than the BP a non-Heritage winning bidder would be paying. In the example I give, Heritage's BP is 18.525% ($1,852.50/$10,000). So they do have a bit of a competitive advantage over the underbidder. If Heritage really wants to make this clean from a PR perspective, they might consider remitting the $97.50 to the consigner. That way, via the $1,852.50 BP "paid" via opportunity cost and the $97.50 extra paid to the consigner, they really are "paying" the full BP.
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