5: The Role of Commodity Exchanges in Pricing

Shortly after the meltdown of the USSR economy, CRU’s chairman, Robert Perlman, and I visited Moscow to sell CRU’s services to the new generation of capitalists. Robert is a keen fan of ballet, so we decided on an evening at the Bolshoi Theatre. The hotel concierge was all smiles – no problem, $85 each plus, I suspected, a tip of at least $15. So we were looking at $200. However, CRU’s Moscow correspondent had told Robert that good tickets could be obtained outside the theatre at $50 for the pair.

The square was thronged with people, all negotiating for tickets. The Bolshoi was apparently reducing costs by paying its performers in tickets, which their friends and relatives had to turn into cash. The prices seemed to be around $100 per pair, but slowly dropped until they reached $65 about five minutes before curtain time. I urged Robert to fold. We were already saving $135 – what was another $15? – and our only chance to see the ballet was that evening. However, he held fast and with two minutes to go we had a $50 price – but not the right seats! So our seller engaged in complex swap transactions with one of his competitors until Robert was satisfied. By now, the square was rapidly emptying and we were among the last to enter the theatre.