9 ms·

eBay is a somewhat unique case, because the goods are often resale items. However, the reaction of many social-economics-warrior types suggests they have failed

eBay is a somewhat unique case, because the goods are often resale items. However, the reaction of many social-economics-warrior types suggests they have failed to realize that this kind of behavior is exactly why there is such a shortage of masks in the first place, despite somewhat recent scares with SARS and Ebola. Letting prices rise is one way to increase production in a hurry. If the mask producers only get to make the same profit margin regardless of demand, why bother fronting the money to increase stock or investing in extra storage space, if there is no guarantee they will be able to recoup those costs during black swans?

prepend 7y ago
Mask manufactures are selling at retail. Rising prices on eBay don’t help them at all.
- darkerside 7y ago
  Doesn't help them directly, but if an imperfect substitute is offered at higher prices, that removes a barrier to charging more for your product.
- aeternum 7y ago
  By letting prices rise, it may be worthwhile for factories that manufacture a similar product, or have manufactured masks in the past to retool back to mask production. While it may be too late for this immediate epidemic, it also incentivizes middlemen to warehouse goods like masks which will help for the next epidemic.
  - AlexandrB 7y ago
    This may or may not be good economics, but it's terrible health policy. If the goal was stopping the spread of COVID19 and masks were an effective preventative measure you would want them to be as cheap as possible to encourage use. This is a scenario where the magic hand of the market will get people killed.
    - gruez 7y ago
      Sounds like a public education problem (ie. people thinking that masks are the silver bullet).
    - smnrchrds 7y ago
      The magic hand of the market will get poor people killed. That's what the magic hand does. If wealthy British are willing and able to pay more for Irish agricultural products that Irish peasants, the invisible hand does not intervene to prevent the famine/genocide. It just ensures Irish agricultural products fetch the highest profit in the open market. A large percentage of the population of Ireland dying as the result is none of the concern of the hand as long as profits are made in the process.
      - DuskStar 7y ago
        Ah yes, the famine caused by having to grow cash crops to pay rent to a foreign empire, leading to overdependence on a single food crop that provided several times the calories/acre/year of anything else. Definitely the magic hand's fault.
        hef19898 7y ago
        Yep, because the magic hand didn't do anything when the one wonder crop didn't grow anymore. It quite literally just let people die. The great irish famine is a fact.
        claudeganon 7y ago
        Consider for a second that you’re comparing an imaginary supposition (the magic hand) by a philosopher of the British Empire with the historical reality of that empire, and evaluate the circumstances again.
        smnrchrds 7y ago
        I am no expert on the subject, so please bear with me if I am missing something. But it looks like back then, people really believed the invisible hand will take care of things, and it didn't, and I would be surprised if it does in our case. From Wikipedia: The new Whig administration, influenced by the doctrine of laissez-faire,[11] believed that the market would provide the food needed, and they refused to intervene against food exports to England, then halted the previous government's food and relief works, leaving many hundreds of thousands of people without any work, money, or food. Charles Trevelyan, who was in charge of the administration of government relief, limited the Government's food aid programme because of a firm belief in laissez-faire.[98]
- H8crilA 7y ago
  Well then they better hire someone who reads the news. Great ROI on that employment contract. I could do that as a consulting gig, hit me up if you know any mask-making CEO and could connect me with them.
- mandelbrotwurst 7y ago
  Mask manufacturers could raise their prices as well if they felt so inclined.
  - prepend 7y ago
    They certainly could, but still wouldn’t make extra from the eBay prices.
  - gruez 7y ago
    I suspect they're under pressure from governments not to.
  - bigeasy 7y ago
    I would hope to see that followed by a similar rise in the price of pitchforks.
- scruffyherder 7y ago
  It's about international demand. There is effectively no masks for retail in Hong Kong. I could order online, but that avenue has now been cut off. There is this entire global market place people always seem to forget.
  - generalpass 7y ago
    > There is this entire global market place people always seem to forget. This is basic microeconomics. People haven't forgot it because they never learned it in the first place.
AlexandrB 7y ago
Increasing prices on preventative medicine/devices is a great way to make sure fewer people use them and disease transmission/severity increases.
- gruez 7y ago
  behold, the supply and demand curve: https://en.wikipedia.org/wiki/Supply_and_demand https://en.wikipedia.org/wiki/Supply_and_demand Yes, increasing price makes it so less people can afford it, but it also makes more supply available so more people can buy it. What use is cheap masks when only a small portion of the population can actually get their hands on it because of shortages?
  - AlexandrB 7y ago
    What use are available masks if only a small portion of the population will buy them because of the cost? Now apply the same market logic to a future vaccine and you'll have a situation where herd immunity will never be achieved because it won't be profitable to achieve it. Edit: It's even worse than the above though. Those that won't buy expensive masks/vaccines are also likely to be those most exposed/vulnerable to the disease in the first place. Then, when they're on death's door they will need much more expensive emergency care at the nearest hospital. Letting the market make these kinds of decisions is how the US achieves such dismal health outcomes despite spending a fortune on healthcare.
    - gruez 7y ago
      > What use are available masks if only a small portion of the population will buy them because of the cost? What use are available masks if only a small portion of the population will have them because of their scarcity? In the short term, the amount of masks are the same. Pricing them higher doesn't magically cause masks to evaporate, and vendors aren't going to hoard masks when they can fetch a high price on the market. In the long term (when production ramps up in response to the increased price) the production of masks will increase, allowing more people in aggregate to have masks, even if it means that some portion of the population will be priced out. The alternative is that the supply of masks stay the same in the short term and long term, and the masks is randomly distributed (at best) or held in the hands of a small number of hoarders.
nitwit005 7y ago
There's a shortage of masks because the production facilities for masks cannot be built and staffed instantly. If you tried to start one up now, the price will likely have collapsed by the time you have it running, leaving you with an unprofitable facility.
- beaner 7y ago
  If the price will have collapsed, that means demand is expected to fall, meaning whatever's causing the current demand isn't a real problem. Is that the case?
  - arpa 7y ago
    Of course! Covid-19 panic is not going to last forever either way.
    - beaner 7y ago
      So there's no harm in short term price rise.
      - anigbrowl 7y ago
        Of course there is, people who need them may be unable to economically purchase them. Basic price theory only obtains under specific conditions like perfect competition, perfect information, fungibility of commodities, and zero friction for market entry and exit.
        baddox 7y ago
        Isn’t the fact that some people will be unable to afford them (or some other potentially lifesaving product) when they need them a problem that needs to be addressed either way? I feel like we’ll be talking around the problem forever if we ignore the fact that “willingness to pay” is a useful concept economically but probably doesn’t match most people’s moral intuition about who ought to get lifesaving resources.
TeMPOraL 7y ago
eBay isn't unique; all the price gouging on Amazon and similar platforms is also resale.
- pishpash 7y ago
  It's not price gouging unless one seller got all the masks. It's called market forces. A lot of products were shipped from the middle of the country to the coasts where there was no stock, faster than any central distribution could achieve. I'm sure people who needed masks were glad they got what they needed before this stupid ban.
  - TeMPOraL 7y ago
    It absolutely is price gouging if masks suddenly cost 20x what they normally do (or perhaps 'profiteering' would be a better term?); moreover, in conditons of undersupply, competition doesn't lower prices, because every seller can be confident they'll clear out their stock (as long as the price doesn't overshoot demand completely).
crobertsbmw 7y ago
What about discouraging people from buying more than they need? If masks are 3x the regular price, I’ll probably try to buy just enough rather than buying twice as many as I need.
curiousgeorgio 7y ago
Yes, exactly! After reading through the replies here, I am dumbfounded by many people's lack of understanding of this basic concept of economics (especially given the usual level of intelligence among the HN crowd). "But the natural effects of supply and demand aren't fair in this situation because..." Letting prices rise is the most fair and overall beneficial reaction in this situation. Even for those who can't afford the inflated prices in the very short-term (who wouldn't have access to them anyway due to limited supply), the rise in prices will help give them access to these goods at reasonable prices in the slightly-delayed short term and in the future when similar shortages occur. I'm seriously blown away by the level of virtue signalling and mental gymnastics going on by those who don't get it, and it scares me that many of those same people hold positions of power to influence public policy.
- sixothree 7y ago
  Who is not "letting prices rise" here? The market is large and eBay is one tiny portion.
kube-system 7y ago
As others have pointed out, production is a bit slower to scale. The more immediate effects of letting prices rise are increased distribution, which can scale very quickly. For just about any consumer good, a large amount of stock is sitting on shelves somewhere that doesn't ship anywhere, and definitely doesn't ship globally. Letting prices rise a bit will create arbitrage markets, which will get the product to where it is needed.

prepend 7y ago

Mask manufactures are selling at retail. Rising prices on eBay don’t help them at all.

darkerside 7y ago
Doesn't help them directly, but if an imperfect substitute is offered at higher prices, that removes a barrier to charging more for your product.
aeternum 7y ago
By letting prices rise, it may be worthwhile for factories that manufacture a similar product, or have manufactured masks in the past to retool back to mask production. While it may be too late for this immediate epidemic, it also incentivizes middlemen to warehouse goods like masks which will help for the next epidemic.
- AlexandrB 7y ago
  This may or may not be good economics, but it's terrible health policy. If the goal was stopping the spread of COVID19 and masks were an effective preventative measure you would want them to be as cheap as possible to encourage use. This is a scenario where the magic hand of the market will get people killed.
  - gruez 7y ago
    Sounds like a public education problem (ie. people thinking that masks are the silver bullet).
  - smnrchrds 7y ago
    The magic hand of the market will get poor people killed. That's what the magic hand does. If wealthy British are willing and able to pay more for Irish agricultural products that Irish peasants, the invisible hand does not intervene to prevent the famine/genocide. It just ensures Irish agricultural products fetch the highest profit in the open market. A large percentage of the population of Ireland dying as the result is none of the concern of the hand as long as profits are made in the process.
    - DuskStar 7y ago
      Ah yes, the famine caused by having to grow cash crops to pay rent to a foreign empire, leading to overdependence on a single food crop that provided several times the calories/acre/year of anything else. Definitely the magic hand's fault.
      - hef19898 7y ago
        Yep, because the magic hand didn't do anything when the one wonder crop didn't grow anymore. It quite literally just let people die. The great irish famine is a fact.
      - claudeganon 7y ago
        Consider for a second that you’re comparing an imaginary supposition (the magic hand) by a philosopher of the British Empire with the historical reality of that empire, and evaluate the circumstances again.
      - smnrchrds 7y ago
        I am no expert on the subject, so please bear with me if I am missing something. But it looks like back then, people really believed the invisible hand will take care of things, and it didn't, and I would be surprised if it does in our case. From Wikipedia: The new Whig administration, influenced by the doctrine of laissez-faire,[11] believed that the market would provide the food needed, and they refused to intervene against food exports to England, then halted the previous government's food and relief works, leaving many hundreds of thousands of people without any work, money, or food. Charles Trevelyan, who was in charge of the administration of government relief, limited the Government's food aid programme because of a firm belief in laissez-faire.[98]
H8crilA 7y ago
Well then they better hire someone who reads the news. Great ROI on that employment contract. I could do that as a consulting gig, hit me up if you know any mask-making CEO and could connect me with them.
mandelbrotwurst 7y ago
Mask manufacturers could raise their prices as well if they felt so inclined.
- prepend 7y ago
  They certainly could, but still wouldn’t make extra from the eBay prices.
- gruez 7y ago
  I suspect they're under pressure from governments not to.
- bigeasy 7y ago
  I would hope to see that followed by a similar rise in the price of pitchforks.
scruffyherder 7y ago
It's about international demand. There is effectively no masks for retail in Hong Kong. I could order online, but that avenue has now been cut off. There is this entire global market place people always seem to forget.
- generalpass 7y ago
  > There is this entire global market place people always seem to forget. This is basic microeconomics. People haven't forgot it because they never learned it in the first place.

AlexandrB 7y ago

Increasing prices on preventative medicine/devices is a great way to make sure fewer people use them and disease transmission/severity increases.

gruez 7y ago
behold, the supply and demand curve: https://en.wikipedia.org/wiki/Supply_and_demand https://en.wikipedia.org/wiki/Supply_and_demand Yes, increasing price makes it so less people can afford it, but it also makes more supply available so more people can buy it. What use is cheap masks when only a small portion of the population can actually get their hands on it because of shortages?
- AlexandrB 7y ago
  What use are available masks if only a small portion of the population will buy them because of the cost? Now apply the same market logic to a future vaccine and you'll have a situation where herd immunity will never be achieved because it won't be profitable to achieve it. Edit: It's even worse than the above though. Those that won't buy expensive masks/vaccines are also likely to be those most exposed/vulnerable to the disease in the first place. Then, when they're on death's door they will need much more expensive emergency care at the nearest hospital. Letting the market make these kinds of decisions is how the US achieves such dismal health outcomes despite spending a fortune on healthcare.
  - gruez 7y ago
    > What use are available masks if only a small portion of the population will buy them because of the cost? What use are available masks if only a small portion of the population will have them because of their scarcity? In the short term, the amount of masks are the same. Pricing them higher doesn't magically cause masks to evaporate, and vendors aren't going to hoard masks when they can fetch a high price on the market. In the long term (when production ramps up in response to the increased price) the production of masks will increase, allowing more people in aggregate to have masks, even if it means that some portion of the population will be priced out. The alternative is that the supply of masks stay the same in the short term and long term, and the masks is randomly distributed (at best) or held in the hands of a small number of hoarders.

nitwit005 7y ago

There's a shortage of masks because the production facilities for masks cannot be built and staffed instantly. If you tried to start one up now, the price will likely have collapsed by the time you have it running, leaving you with an unprofitable facility.

beaner 7y ago
If the price will have collapsed, that means demand is expected to fall, meaning whatever's causing the current demand isn't a real problem. Is that the case?
- arpa 7y ago
  Of course! Covid-19 panic is not going to last forever either way.
  - beaner 7y ago
    So there's no harm in short term price rise.
    - anigbrowl 7y ago
      Of course there is, people who need them may be unable to economically purchase them. Basic price theory only obtains under specific conditions like perfect competition, perfect information, fungibility of commodities, and zero friction for market entry and exit.
      - baddox 7y ago
        Isn’t the fact that some people will be unable to afford them (or some other potentially lifesaving product) when they need them a problem that needs to be addressed either way? I feel like we’ll be talking around the problem forever if we ignore the fact that “willingness to pay” is a useful concept economically but probably doesn’t match most people’s moral intuition about who ought to get lifesaving resources.

TeMPOraL 7y ago

eBay isn't unique; all the price gouging on Amazon and similar platforms is also resale.

pishpash 7y ago
It's not price gouging unless one seller got all the masks. It's called market forces. A lot of products were shipped from the middle of the country to the coasts where there was no stock, faster than any central distribution could achieve. I'm sure people who needed masks were glad they got what they needed before this stupid ban.
- TeMPOraL 7y ago
  It absolutely is price gouging if masks suddenly cost 20x what they normally do (or perhaps 'profiteering' would be a better term?); moreover, in conditons of undersupply, competition doesn't lower prices, because every seller can be confident they'll clear out their stock (as long as the price doesn't overshoot demand completely).

crobertsbmw 7y ago

What about discouraging people from buying more than they need? If masks are 3x the regular price, I’ll probably try to buy just enough rather than buying twice as many as I need.

curiousgeorgio 7y ago

Yes, exactly! After reading through the replies here, I am dumbfounded by many people's lack of understanding of this basic concept of economics (especially given the usual level of intelligence among the HN crowd). "But the natural effects of supply and demand aren't fair in this situation because..." Letting prices rise is the most fair and overall beneficial reaction in this situation. Even for those who can't afford the inflated prices in the very short-term (who wouldn't have access to them anyway due to limited supply), the rise in prices will help give them access to these goods at reasonable prices in the slightly-delayed short term and in the future when similar shortages occur. I'm seriously blown away by the level of virtue signalling and mental gymnastics going on by those who don't get it, and it scares me that many of those same people hold positions of power to influence public policy.

sixothree 7y ago
Who is not "letting prices rise" here? The market is large and eBay is one tiny portion.

kube-system 7y ago

As others have pointed out, production is a bit slower to scale. The more immediate effects of letting prices rise are increased distribution, which can scale very quickly. For just about any consumer good, a large amount of stock is sitting on shelves somewhere that doesn't ship anywhere, and definitely doesn't ship globally. Letting prices rise a bit will create arbitrage markets, which will get the product to where it is needed.