Economics of Hell (Part II)

Welcome back to another session of Economics from HELL!...of Hell...Economics of Hell.

As you may remember from last time we proved that either God does not exist, the Bible is the work of Satan or the Judeo-Christian tradition is just plain wrong. Luckily we don't have to throw away the whole model; flaws exist in the argument:
1. A miracle does not cost God anything.
Therefore God is just exchanging one good of zero value for another good of zero value. Hence he has no net gain or loss.
2. God can do whatever he wants.
And people just get to shut up an believe it. Belief systems are not meant to be rationalized.

Now that the demand curves are sorted out, we need a supply curve to complete the model. While the individual situation is unusual in that each potential seller has only 1 unit, the standard theory remains valid. As the price increases additional sellers enter the market increases the quantity supplied providing the same effect as existing sellers increasing production. The supply curve is shown in green in figure 1.

From the Supply-Demand model we can note than God will never acquire a soul through economic activity (the equilibrium quantity is 0). This makes the Soul market a monopsony (single buyer, somewhat similar to the monopoly where there is only one producer). As a monopsonist Satan has pricing power allowing him to choose the price rather than being forced by the market. You can see in figure 2 how the producer and consumer surplus changes. These surpluses are similar to profits: for the seller it represents how much they receive in excess of the minimum price they'd sell at; for the buyer it represents how much lower the price paid is compared to what they'd be willing to pay. By selecting a lower price than the market equilibrium, the surplus of the sellers (the green area) is decreased, and Satan's surplus (the pink area) is increased.

And it gets worse, we know that there is imperfect information in this market. One seller of a soul has very little information regarding the average price. This permits Satan to engage in extreme price discrimination. Whereas in the previous model all sellers receive the same price price (providing a profit for those who value their soul less), now each seller receives only the minimum price it would take for them to sell, and eliminating all profit (producer surplus) from such activities.

So it looks like common wisdom is correct: Satan is evil, and you do not profit from selling your soul.