5 ms·

you say "gouge" I say "increase supply to meet demand". during/after Hurricane Katrina a couple of guys spent tens of thousands of dollars ~$500 electric gener

you say "gouge" I say "increase supply to meet demand". during/after Hurricane Katrina a couple of guys spent tens of thousands of dollars ~$500 electric generators. Rented a truck and drove a long distance to NOLA where they started selling the generators for $3000. They had willing customers, but the police arrested them for "price gouging" and confiscated the generators. Instead of having the option of paying for something that people desperately needed, emotional politicians passed a law ENSURING that people don't bust their ass to bring goods to market. How sad. EVERYONE is worse off in that situation. EVERYONE could have been better off.

Retric 9y ago
In the traditional case of actual stores the increase in price does not associate with an increase in supply.
- pc2g4d 9y ago
  Gas stations seem pretty inflexible in how much they can supply to market through their pumps. Increasing prices has more to do with making the quantity demanded and quantity supplied equal. When the supply quantity isn't flexible, it's demand that must change, and that's very easily accomplished by a change in prices. At least, that's the theory :-)
zeveb 9y ago
In the specific case of raising prices, I'd argue that it's decreasing demand to insure sufficient supply. I agree, thought, that it's a good thing.
- princeb 9y ago
  it's not a good thing, but it is a necessary thing... meant to make consumers think hard about efficient use of a limited resource. you'd probably be as careful as possible with gas if it were $20 per gallon, and rationing gas is going to help everyone who needs gas.
lovich 9y ago
How do you identify a situation like this where people might have been helped by the "price gouging" vs something like a company running a festival where they don't allow water to be brought in and you can only buy it from approved vendors who increase the price massively? If there's going to be error one one side or the other, I'd prefer it to be on the side that doesn't incentivize company's to do things that hurt people.
- tdb7893 9y ago
  There was nothing stopping other people from buying generators and going down. It's the possibility of competition that's important in my mind. I've come to the conclusion that nothing protects consumers as much as competition
  - lovich 9y ago
    ISP's have a possibility of competition but they don't. The possibility of something happening can not be the end all for legislation
    - rlpb 9y ago
      See https://en.wikipedia.org/wiki/Natural_monopoly https://en.wikipedia.org/wiki/Natural_monopoly. ISPs are in an objectively different situation from gas stations and the supply of generators over a distance in a disaster situation.
      - derefr 9y ago
        The thing with gas stations is, the gas has to come from somewhere. For various reasons, oil companies are in a natural-monopoly position (or rather, a natural cartel position, that uses various branding tactics to discourage the appearance of collusion—much like the deBeers cartel does for diamonds.) With so much leverage over their direct customers, the oil cartel isn't interested in allowing gas stations to eat into their profit margin. So they buy them. Thus, gas stations become another facet of the cartel.
    - 9y ago
Spooky23 9y ago
There's no supply issue. We're talking about adding small marginal cost to transactions between 4-7 PM on Friday and 6-9AM Monday. They don't price it too high, because shifting demand would actually cost them some revenue on the higher margin convenience business. I bet the model here is that the oil company owns the gas and the retailer sells it on consignment. The oil guys control the price and care about making investments to chisel pennies, as they have hundreds of gas stations. They can't steal too many pennies though, or the coffee and hotdog business inside will falter. Re: your disaster profiteer use case, I have little sympathy. I'm sure those guys were doing things like collecting Lousiana sales tax, etc that everyone else was going to do.
- caminante 9y ago
  >There's no supply issue. Oh, but there is! FTA: >"One client called to complain the software was malfunctioning. A competitor across the street had slashed prices in a promotion, but the algorithm responded by raising prices. There wasn’t a bug. Instead, the software was monitoring the real-time data and saw an influx of customers, presumably because of the long wait across the street." Maybe the only way this gas station can stay in business (add supply) is to charge congestion premiums.

Retric 9y ago

In the traditional case of actual stores the increase in price does not associate with an increase in supply.

pc2g4d 9y ago
Gas stations seem pretty inflexible in how much they can supply to market through their pumps. Increasing prices has more to do with making the quantity demanded and quantity supplied equal. When the supply quantity isn't flexible, it's demand that must change, and that's very easily accomplished by a change in prices. At least, that's the theory :-)

zeveb 9y ago

In the specific case of raising prices, I'd argue that it's decreasing demand to insure sufficient supply. I agree, thought, that it's a good thing.

princeb 9y ago
it's not a good thing, but it is a necessary thing... meant to make consumers think hard about efficient use of a limited resource. you'd probably be as careful as possible with gas if it were $20 per gallon, and rationing gas is going to help everyone who needs gas.

lovich 9y ago

How do you identify a situation like this where people might have been helped by the "price gouging" vs something like a company running a festival where they don't allow water to be brought in and you can only buy it from approved vendors who increase the price massively? If there's going to be error one one side or the other, I'd prefer it to be on the side that doesn't incentivize company's to do things that hurt people.

tdb7893 9y ago
There was nothing stopping other people from buying generators and going down. It's the possibility of competition that's important in my mind. I've come to the conclusion that nothing protects consumers as much as competition
- lovich 9y ago
  ISP's have a possibility of competition but they don't. The possibility of something happening can not be the end all for legislation
  - rlpb 9y ago
    See https://en.wikipedia.org/wiki/Natural_monopoly https://en.wikipedia.org/wiki/Natural_monopoly. ISPs are in an objectively different situation from gas stations and the supply of generators over a distance in a disaster situation.
    - derefr 9y ago
      The thing with gas stations is, the gas has to come from somewhere. For various reasons, oil companies are in a natural-monopoly position (or rather, a natural cartel position, that uses various branding tactics to discourage the appearance of collusion—much like the deBeers cartel does for diamonds.) With so much leverage over their direct customers, the oil cartel isn't interested in allowing gas stations to eat into their profit margin. So they buy them. Thus, gas stations become another facet of the cartel.
  - 9y ago

Spooky23 9y ago

There's no supply issue. We're talking about adding small marginal cost to transactions between 4-7 PM on Friday and 6-9AM Monday. They don't price it too high, because shifting demand would actually cost them some revenue on the higher margin convenience business. I bet the model here is that the oil company owns the gas and the retailer sells it on consignment. The oil guys control the price and care about making investments to chisel pennies, as they have hundreds of gas stations. They can't steal too many pennies though, or the coffee and hotdog business inside will falter. Re: your disaster profiteer use case, I have little sympathy. I'm sure those guys were doing things like collecting Lousiana sales tax, etc that everyone else was going to do.

caminante 9y ago
>There's no supply issue. Oh, but there is! FTA: >"One client called to complain the software was malfunctioning. A competitor across the street had slashed prices in a promotion, but the algorithm responded by raising prices. There wasn’t a bug. Instead, the software was monitoring the real-time data and saw an influx of customers, presumably because of the long wait across the street." Maybe the only way this gas station can stay in business (add supply) is to charge congestion premiums.