“Now, if the land owner are correctly calibrated, and they correctly anticipate the odds of your project being a success, your expected profit on the sale of the land must be zero.”
I worry that this argument appears to apply to any business venture at all that involves buying land. Indeed, it applies to any business venture at all that involves buying anything. But, many people seem to think that projects that involve purchasing goods or services can in fact be profitable.
Goods (such as steel or land) can be improved by turning the steel into a plane, or adding a train connection to the land. Your model seems to be roughly that the current owner works out the chances that someone will buy the steel or land and turn it into a plane, or add a train connection, and then they price with that chance in mind. The problem (I think) is that their is causal connection between the price and the process of it turning into the imagined end product. If you charge extra for your steel because you think it will turn into a plane, then it won’t, because Boing will just buy steel from someone else and turn that into a plane instead of yours.
“Now, if the land owner are correctly calibrated, and they correctly anticipate the odds of your project being a success, your expected profit on the sale of the land must be zero.”
I worry that this argument appears to apply to any business venture at all that involves buying land. Indeed, it applies to any business venture at all that involves buying anything. But, many people seem to think that projects that involve purchasing goods or services can in fact be profitable.
Goods (such as steel or land) can be improved by turning the steel into a plane, or adding a train connection to the land. Your model seems to be roughly that the current owner works out the chances that someone will buy the steel or land and turn it into a plane, or add a train connection, and then they price with that chance in mind. The problem (I think) is that their is causal connection between the price and the process of it turning into the imagined end product. If you charge extra for your steel because you think it will turn into a plane, then it won’t, because Boing will just buy steel from someone else and turn that into a plane instead of yours.