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This might sound a simple and small thing, but is quite symptomatic on how a free market mechanism punishes the bad trader.
A week back I had gone to the vegetable market, and at one shop there was good potatoes – the vegetable vendor said it was Rs 12 per kg – I said ok. So, I selected some of the good ones – the vegetable vendor mixed it up with some of the small and not so good potatoes – and rudely said that I will have to take the mixed one – and I could not be selective. I simply said keep all your potatoes – I dont want it from you. Needless to say – I didn’t buy anything from his shop.
Yesterday, when I went to the vegetable market – he seemed to be a chastened guy. He not only charged the market price of Rs. 10 per kg, but was also willing to help choose the potatoes – and there was no mixing or any rudeness.
It seemed quite clear that he had been punished by the forces of free market, where the buyers would prefer to buy from another vendor rather than buy it from someone who indulges in unethical practices. And as he realised that people were prefering to buy from others rather than him, he was forced to adopt better trading practices.