4 ms·

These kinds of prices (gouging) are not at an idealized equilibrium. They don't reflect the true supply. They're just predatory on people who have incomplete

by platz 7y ago

These kinds of prices (gouging) are not at an idealized equilibrium. They don't reflect the true supply. They're just predatory on people who have incomplete information.

H8crilA 7y ago
There is no supply. It's a supply-shock-like type of situation. There are not enough masks for all the people that want them, let alone all the people. You have to wait for new masks to be manufactured. And I wouldn't blame the Chinese if they halted the shipments with their equivalent of an Executive Order.
- concerned_user 7y ago
  You are correct, in my country in europe only ones who wear masks are medical professionals and even then not all of them. Nobody wears one when they get cold or flu and still decide to go out. So in my country there is no buffer at all and I assume that people watched tv saw chinese wearing them and heard that china made it mandatory to wear when going out which led to panic buying of face masks. Because local press and tv say it doesn't protect a healthy person, which is true. I can see how it can be effective when every single person wears these masks outside, like china did, since it would prevent people without symptoms spreading disease as much, but in a situation when we can't supply everyone it is better to leave them for use by medical staff and people in need only.
BurningFrog 7y ago
Prices are exactly how information about supply and demand are transmitted to the market!!!
- platz 7y ago
  Basic price theory only obtains under specific conditions like perfect competition, perfect information, fungibility of commodities, and zero friction for market entry and exit.
  - BurningFrog 7y ago
    That's a common misconception. Yes, the theory only applies perfectly under those conditions, but real world experience is that the theories are quite robust even when all of those "perfect" preconditions are far from perfect. This is what makes the theories so practically useful in the first place! Studying how and when the theories break down when "perfection" diminishes is a very interesting part of Economics.

by platz 7y ago

These kinds of prices (gouging) are not at an idealized equilibrium. They don't reflect the true supply. They're just predatory on people who have incomplete information.

H8crilA 7y ago

There is no supply. It's a supply-shock-like type of situation. There are not enough masks for all the people that want them, let alone all the people. You have to wait for new masks to be manufactured. And I wouldn't blame the Chinese if they halted the shipments with their equivalent of an Executive Order.

concerned_user 7y ago
You are correct, in my country in europe only ones who wear masks are medical professionals and even then not all of them. Nobody wears one when they get cold or flu and still decide to go out. So in my country there is no buffer at all and I assume that people watched tv saw chinese wearing them and heard that china made it mandatory to wear when going out which led to panic buying of face masks. Because local press and tv say it doesn't protect a healthy person, which is true. I can see how it can be effective when every single person wears these masks outside, like china did, since it would prevent people without symptoms spreading disease as much, but in a situation when we can't supply everyone it is better to leave them for use by medical staff and people in need only.

BurningFrog 7y ago

Prices are exactly how information about supply and demand are transmitted to the market!!!

platz 7y ago
Basic price theory only obtains under specific conditions like perfect competition, perfect information, fungibility of commodities, and zero friction for market entry and exit.
- BurningFrog 7y ago
  That's a common misconception. Yes, the theory only applies perfectly under those conditions, but real world experience is that the theories are quite robust even when all of those "perfect" preconditions are far from perfect. This is what makes the theories so practically useful in the first place! Studying how and when the theories break down when "perfection" diminishes is a very interesting part of Economics.