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Not exactly. In this case it is the government which is mandating the prices. While market prices would naturally rise due to increased demand, the statement "b
by ancap 11y ago
Not exactly. In this case it is the government which is mandating the prices. While market prices would naturally rise due to increased demand, the statement "because people are drinking it too much" does not necessarily denote increased demand.
Market prices are one of the most essential aspects of a healthy economy. It is the lack of market prices which right off the bat dooms any form of socialism to failure. Any time you see large scale, perpetual shortages of any kind you can know there is some form of price fixing or market manipulation going on by the government.
- beambot 11y agoYou covered demand... But what about supply? You can have perpetual shortages on the supply side that keep prices up. The entire luxury goods market relies on this, as an example. I'm afraid I'm not confident in your analysis; seems to oversimplified.
- ancap 11y ago>You can have perpetual shortages on the supply side that keep prices up. The entire luxury goods market relies on this, as an example. You'll have to go into more depth on your example. I'm not sure to what you're referring. >But what about supply? Reread the second paragraph in my comment. Generally, when the term "shortages" is used, it refers to supply. As for the "perpetual shortages on the supply side that keep prices up", I'm not sure you are using the term "shortage" as it is understood in economics. Just because something is not available at a price I prefer does not connote a shortage (as defined in economics). Otherwise the fact that I cannot buy a Lotus car for $10k would mean there is a shortage. However, if the government introduced price controls on Lotus cars so they could only be sold for $10k, you would definitely have a shortage because more people would want them (demand) at that price point but no one would be willing to sell them (supply).
- phonon 11y agoLook up Artificial Scarcity.
- ancap 11y agoExplain how artificial scarcity could exist in a free market
- beambot 11y agoChanel captures the entire market for Chanel handbags. Their company entirely controls the supply, and they artificially limit the new supply fabricated each year. No other company can manufacture Chanel handbags. Hence: artificial scarcity. Many luxury good companies operate on this premise. Hence my original comment.
- ancap 11y agoYou are not describing a shortage as defined in economics. Re-read my previous comment. You are not even describing a monopoly because there are still alternative brands, even luxury brands, which people can buy. Otherwise any brand would be considered a monopoly. EDIT: used "scarcity" instead of "shortage"