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>The first guy in the store buys fifty when he only needed one because he wanted to be sure to have enough, but then the store runs out before everyone has one
by licebmi__at__ 7y ago
>The first guy in the store buys fifty when he only needed one because he wanted to be sure to have enough, but then the store runs out before everyone has one and there are fifty unused masks in the one guy's basement.
Maybe he won't give anything up because price might keep going up and whenever he needs the masks they will be so costly he cannot afford them.
Or maybe the price rise will give some party an incentive to stockpile masks because making money is a clear incentive instead of a more nebulous "avoid a health crisis".
- TeMPOraL 7y agoYup. Compare with other assets: people don't sell when prices go up. Last thing we need now is turning PPE into an investment vehicle.
- AnthonyMouse 7y agoPeople only don't sell things when the prices go up if they expect them to go up even more. That doesn't apply to temporary shortages at all. Either the demand will fall off over time or manufacturing will catch up to the demand, either of which causes the prices to decrease over time. Anybody who wants to profit from a shortage has to do it while there is still a shortage.
- TeMPOraL 7y agoThere is no end of this shortage in sight. In fact, the shortages in Europe are only about to start - the last batch of pre-lockdown container ships from China arrived to Europe earlier this week.
- AnthonyMouse 7y agoIt is physically possible to manufacture things outside of China. Which is why higher prices are necessary -- it costs more to do that, but we want it to happen so that the supply increases. The lead time to start manufacturing simple products like masks isn't that long. That puts a time limit on the high prices -- even if the demand stays high, supply catches up to it. (Compare this to, say, housing where increasing supply is constrained by zoning which prevents supply from increasing in response to demand.)