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Key Takeaways

Pricing isn’t driven by averages; the highest-cost marginal customer sets market price.

Identify your “last unit” and price around scarcity, not typical user behavior.

Setting the price for your product is confusing, and many assume that averages set prices. If you want a clean mental model for why that’s not what’s happening, look at power.

I’m a former quant researcher on Citadel’s commodities team covering power, and one of the most important properties is that the market clears at the economically efficient price.

It’s supply, demand and various constraints.…