How did Milo sell eggs and manage to make a profit? Catch 22

I remember reading catch 22 by Joseph Heller.

Milo sells eggs for 7 cents. These are known as 7 cents Maltese eggs because they come from Malta and usually cost 7c.

Explanation included in the link (about 200 words). See, what I don't get is how Milo makes a profit. He buys his eggs at a base price of 1c in Sicily.

Milo has a crate of 100 eggs for $1. So far so good. Next, he heads for Malta. Here, he sells the eggs. To himself.

Now this is where I think I'm getting mixed up. Buy low, sell high, right? He has to go to Malta and sell the eggs for more than 1c each, right? But the only seller he can find is himself.

So how is he able to make a profit in Malta with 1c Sicilian eggs?

He needs demand. How does he make demand?

He buys his own eggs back to create a demand spike high enough to counter the increased supplies he himself has brought in.

But how? This bit is really baking my noodle!

Milo buys eggs from Milo (who bought eggs originally for 1c each).

I'm thinking what he's got here is a common Giffen good. This means the price rises as the demand rises, possibly because wartime economics cause a positive elasticity of demand within common goods like eggs, milk, bread and whiskey.

I imagine that one went over your heads. I did economics in school, but it was all in Irish, so a lot of it didn't make sense to me either.

Complicated?

Yeah, that's great, but I still don't quite get how Milo is able to buy and sell goods to himself. I suppose there must be some demand in every town he visits for the goods he's selling, especially if he can offer goods below their usual cost.

So he must be bringing in a supply, creating a small demand, selling a few eggs (or whatever) then buying a load of them himself to create a demand spike which in turn takes advantage of the Giffen good paradox making him a profit. He then sails on to the next town and does the same thing again, jacking up the price on the way.

The story also tells of how Milo bought up the entire Egyptian cotton market and realised he wasn't able to sell the stuff.

I think that's it. Common goods with usually negative price elasticity. If the price of eggs goes up in my local store, I'll shop around. But if I can't shop around, I have to set aside more money to buy eggs. And if everyone is in the same situation, the price of eggs is going to go up and up but demand won't go down.


Now since I'm talking about economics, it just occurred to me that the cost of researching cryogenics could be offset by compound interest and a lot of time. Just like that episode of Futurama where Fry realises his $10 in the bank has 1000 years worth on interest on it and has grown in value significantly.


Now all I have to do is rationalize the duality Milo maintains as supplier, middleman and buyer of all his own goods.

Does it make sense to any of you guys?

*Edit - Wikipedia says the final buyer is the U.S. Army. That explains it I think