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And yet businesses in the real world are working hard to increase supply of these very goods right now just so that they can sell them at a regular price. Some
by jonknee 9y ago
And yet businesses in the real world are working hard to increase supply of these very goods right now just so that they can sell them at a regular price. Some companies even give away stuff like bottled water, what's the economic explanation of that?
tl;dr left out of your economic models are things like good will and civic pride.
- darawk 9y agoThey're not working as hard as they would be. And there are no new entrants to the market. Sure, companies might, on their own good will, work hard to deliver more water bottles. But if people are buying water bottles for $100 a pop, i'm gonna drive over there myself with a case of Arrowhead, and i'd bet so are you. High prices motivate people who wouldn't otherwise involve themselves to provide the supply. This is the essence of a market. Markets abhor an arbitrage opportunity, and price gouging is an arbitrage opportunity.