4 ms·
It's not as clear cut as you say. For example, the large increase in price creates perverse incentives to reduce the available supply and make it available at
by jfim 7y ago
It's not as clear cut as you say.
For example, the large increase in price creates perverse incentives to reduce the available supply and make it available at a higher price (eg. buying all the masks at $n and reselling them at a price greater than n).
A higher price also encourages counterfeiting; making fake masks that sell for $1 isn't that profitable, but if they sell for $50, there's definitely more of an incentive to do so.
- Faaak 7y agoYou suppose that you only have one "hoarder" (or speculator) in the market. Once you have many, and if they don't talk together (which would be forbidden), masks would sell lower than what you think
- gwright 7y agoThe problem of low-quality or defective merchandise exists at any price point. Adding price controls doesn't prevent that problem and in fact would encourage black markets where defective merchandise is less likely to be detected by consumers or regulators.