I like the theory, but I think it rests on several assumptions about the buyer that may or may not be true: 1. The buyer knows, or has very good reason to believe, that the particular item will be purchased quickly once it reaches the $500 price point. 2. The buyer's time is worth more than $500, preventing him from being the person who shows up the minute the store opens to purchase the item. 3. The buyer is risk-averse, and would rather pay $500 extra than wait for the item to show up on eBay.
Ambulance brings up salient points. Â However, given that there are 3 sets of markdowns after the initial (from 2000 to 500) after the item appears at the outlet. Â Assuming that the Flipper can potentially make a profit after the first markdown, but not before, and not necesssarily, there are 3 chances for the Buyer to make the purchase during which the outlet will not take a loss, and 2 chances the flipper could make the purchase without the outlet taking a loss. Â JN3 only pointed out the extreme case where there have already been 2 sets of markdowns taken. Assumptions 1 and 3 become stronger and stronger assumptions as the discounts progress, especially in light of the fact that more and more people are becoming aware of the Flipper's esistence, as JN3 has pointed out. Moreover, consider that: a) The buyer is in a localized market. Â Once it goes on Ebay, the markup may easily make the price go above the 1000. Â It is not therefore necessarily advantageous for the Buyer to wait for the last markdown. Â So JN3's arguments doesn't depend that strongly on the third assumption. b) The buyer knows that not all Flippers are as ethical as JN3 is. Â They may attempt to flip the item, and finding that it does not sell, return it back to the outlet, at which point the price goes back up to the original 2000 (these are FB rules). Â This gives further incentive for the Buyer to purchase before the final markdown. Only assumption 2 remains a weak assumption throughout.