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The best thing that can happen in an emergency is to let sellers increase prices. When gas is scarce, let the price of gas go up. This signals to people that th
by seibelj 7y ago
The best thing that can happen in an emergency is to let sellers increase prices. When gas is scarce, let the price of gas go up. This signals to people that they should carefully ration the supplies that exist, and only let the people willing to pay the most get it. Supply and demand solves the problem itself.
When you arbitrarily constrain prices, you make people wait in lines and clever entrepreneurs stock up to sell at inflated rates on the black market. Terrible policy!
- perl4ever 7y agoI don't think it's as black and white as that. If demand exceeds supply, you have to have some means of making them match. But it doesn't have to be price. You just have to accept that it will be something and not pretend there is no issue. In WWII, people got through it with rationing.
- mytherin 7y agoIn the long term supply and demand solves the problem, yes, but in the current situation that is not necessarily true. Raising prices incentivises people to hoard masks, buy up all masks they can from retail for lower prices, steal masks, etc to sell at a profit. By the time more production is available the outbreak is already over, thus the amount of masks is essentially fixed to what we have. "Who is willing to pay the most" is not necessarily the best metric of dividing essential goods in a crisis. What if nurses and doctors don't have access to masks because a few people that don't even need them buy up all supply, to then price gauge people later?