Consumer Value Markets

Kevin Cox
6 min readJun 14, 2021

The free market is an economic system based on supply and demand with little or no government control. It is a summary description of all voluntary exchanges that take place in a given economic environment. Free markets are characterized by a spontaneous and decentralized order of arrangements through which individuals make economic decisions. Based on its political and legal rules, a country’s free market economy may range between very large or entirely black market.

Investopedia Definition

Market economies assume price reflects value. Buyers choose to purchase the goods and services that give the most value for the lowest cost. Supposedly the market leads to economic efficiency or the most value exchanged for the least amount of money. However, sellers offer their goods and services that give them the highest price compared to other sellers. So, the price is relative and set at what the buyer will pay. Markets keep prices in check when many independent sellers operate competitively in a free market.

Markets assume buyers allocate their purchases according to the value to cost ratio, and the value of money is independent of the buyer. These assumptions are wrong. The value of money depends on the buyer’s wealth and the buyer’s need for the product.

Equating price with value causes distortions in the marketplace and leads to inefficiencies in allocating goods, services and investments. It happens when we monetise productive assets and turn markets in products into money markets. Money markets are markets where we buy possible future output to sell to buyers at a higher price. Unfortunately, uncontrolled money markets are unstable as investors with more money can outbid prospective buyers who have less money but need the product. It leads to investor rentier behavious. As a result, unchecked money markets will increase prices independently of demand and supply until the market collapses.

Governments recognise the flaws in the system and invent ways to overcome the difficulties. But, unfortunately, most fixes decrease the value while increasing the cost. As a result, the fixes further reduce economic efficiency. Thus, the invisible hand of the market becomes an invisible brake.

Selecting buyers

Another way of organising markets is to set prices based on production cost plus a profit and sell to buyers who get the most value from the product. For example, a dwelling’s value is very high to a homeless person and less valuable to a person with several houses. Therefore if the homeless person can pay to rent the home, it is best occupied by the homeless person as the value to them is greater than the value to a person with a home. Thus, when we select buyers based on the value to the buyer, we have an economically efficient market.

Still, many people will qualify to buy a place, and the measurement of value is imprecise. So when the value between buyers is indistinguishable, we introduce a random element into buyer selection.

Markets with fixed prices and the semi-random selection of buyers cost less to operate than variable price markets and work well for natural monopoly markets. Buyer markets where buyers are also investors further reduce costs and increase efficiency. If the buyers acquire an investment when they purchase the goods and services the market efficiency increases.

Investors as buyers of future production

Businesses produce goods and services. To make something requires investment. Investment involves money, and investors are buyers of future production. We can change investment markets to set the price of the future output and select buyers who get the greatest value.

Investors receive a profit, and the profit is part of the price paid for the goods and services. Setting prices by the cost of production requires fixing the investor profit. It means investors wait until the sale of goods and services before receiving their investment plus the returns on investment.

We achieve this by setting an investor profit to reflect the investment risk. The investment risk relates to the acquisition and retention of customers. Products with a known demand and customer investors reduce the risk. Setting up the investment so that customers become investors when they purchase goods and services ensures that the market always has customers.

Prepayments with discounts on goods and services is a way to encourage investors. Instead of investing in ownership of production, an investor buys prepayments for goods and services. The longer a prepayment is held, the greater the discount. Investors must use, sell or reinvest their investments in equal monthly amounts. The system adjusts the prepayment schedule when the monthly amounts differ from the fixed amount.

For goods and services where production is likely to last a long time, the returns are lower. Conversely, the returns are higher for goods and services when the business and environment changes.

Capital in a Fixed Price market

Capital in traditional markets is the asset value of the means of production. Capital as prepayments is the value of unspent prepayments. With mature markets, prepayments capital in the business is likely to drop, and the drop in capital reduces the cost of goods and services. It means investors seek innovations to reduce the cost of goods and services. Such goods and services require fewer physical resources, such as longer-lasting goods, reusable goods, service industries, environment protection, entertainment, and knowledge.

Implementation of Prepayment Capital

Any business can organise itself to operate with prepayment capital. Having customers and workers as the owners fits well with non-distributing local business cooperatives.

Housing Democracy outlines how it might work for affordable housing. Lower Cost energy outlines a local energy production and distribution business. Equal Money Investment Utility outlines a software product to implement prepayment capital book-keeping. Finally, community Funded Water Systems shows how to remove the need for water restrictions, increase water availability, and remove the cost of debt.

We can apply the same principles to provide affordable health care for all, free education, and sustainable, affordable food production.

Any marketplace of goods and services benefit from the inclusion of economically efficient buyer owned businesses.

Government assistance for innovation

Governments can encourage innovation within communities by encouraging local buyer funded innovation businesses. A local innovator supports the innovation by selling prepayments to local investor/buyers. The government can encourage investment by becoming a buyer of prepayments from which it gets a high return. The returns from the innovations can fund further innovations. The government is an investor without the worry of ownership but with the returns of ownership. Members of the local community are collective owners of innovation prepayments.

Prepayment investments can replace grants, concessions and other forms of assistance. The approach is also a way to bring innovation into government-supplied services. The government can sell prepayments for government services and taxes and use the money to invest in innovations and capital goods to improve government services and build wealth for the community.

Government Support for an Energy Monitoring System in Residents Housing

To illustrate the idea, let us assume a local organisation has developed a home energy monitoring system. The government wishes to encourage the deployment and development of the system. Tooling up the system and deploying it in 10,000 homes will cost $10,000,000. The system expects to save residents, on average, $10,000,000 within the first five years, with savings to continue at the same rate for the next 15 years. The savings for each household vary from $50 to $500 each year, with an average of $100 per household. Load sharing across homes saves another $100 per house per year.

The 10,000 households form into 40 community groups, with an average of 250 homes in each group. The households pay the cooperative 70% of the savings each year or 10,000 times $140 or $1,400,000. The government receives $1,000,000 indexed for inflation each year for ten years, and the other $400,000 goes to the cooperative to operate the system. At the end of 10 years, the cooperative has assets of the value of $10,000,000 that will earn the cooperative $1,400,000 per year and pay for upgrades and operation.

All the $2,000,000 each year of savings stays in the community in the form of lower electricity prices.


Money markets are unstable, as are monetised asset markets that produce goods and services. However, we can stabilise most monetised asset markets by giving investors a fixed return after goods and services are sold and selling the output of assets to the customers who place the highest value on the product. The approach reduces the cost to a community of many goods and services such as housing and works well to fund and price natural monopolies.



Kevin Cox

Kevin works on empowering individuals within local communities to rid the economy of unearned income.