5 ms·
Yes, that is an an argument. It's just not terribly convincing if you don't already subscribe to the idea that markets are always right, externalities be damned
by herbstein 7y ago
Yes, that is an an argument. It's just not terribly convincing if you don't already subscribe to the idea that markets are always right, externalities be damned.
- baryphonic 7y agoWhat externalities?
- yladiz 7y agoOne example is a pandemic.
- logicchains 7y agoThe point is that capping the price of e.g. masks means _fewer masks_ are produced, which is worse for stopping the pandemic.
- kharms 7y agoPrice gouging laws typically apply at the consumer point of sale, I'm not sure they prevent a higher price from factory to store.
- waterhouse 7y agoIf the law prevents the store from charging a high price to the consumer, then that effectively prevents the factory from charging a high price to the store, because the store would make a loss if it accepted that price.
- kharms 7y ago>>What if a seller increased the price of a good or service because the seller’s costs of providing the good or service increased? >If the seller can prove that the increased price is directly attributable to increases in the cost of labor or materials needed to provide the good or service, the seller may not be liable under the statute. It's right there on the linked page. This basically prohibits large markups while allowing for passing of costs.
- baryphonic 7y agoI am intimately aware of exactly what constitutes an externality. I fail to see how this situation (two parties agreeing to a high price for a consumption good) has impacts on third parties. I'm not sure how "pandemic" applies, either.
- dabbledash 7y agoHow is that an externality?
- deleted 7y ago[deleted]
- ZhuanXia 7y agoHigh prices induce production that would not have occurred otherwise. They also curve demand downwards so that only those who really want the item will get it. There is little reason to outlaw price gouging save for humans have a disgust response to people who profit from tragic events. Absent these laws, there would be incentive to create stockpiles of needed items before a disaster and retool less-efficient factories to produce now more-profitable items during a crisis. We do not think markets are magic. We think they are machines that run on price signals, and bashing these signals with hammers will degrade the efficiency of the machine.
- karamanolev 7y agoI do agree with the inducing production part. Where this massively fails is the "only those who really want the item will get it". This is really "the wealthy can afford the item without batting an eye and the poor be damned". Not exactly a great idea for essential items.
- gwright 7y agoIt is not that. A higher price doesn't magically mean that rich people get it and poor people don't. Everyone will respond to that price signal and adjust their behavior. Everyone will also change their priorities. There seems to be this idea that there are millions upon millions of people who have a fixed budget and purchase plan that has no room for adjustment at all. I don't think that is true, it is a myth. And in any case, if the preferred policy of not letting prices float results in a completely empty shelf in the grocery store, please explain to me how the poor, middle class, or rich are going to purchase anything from that empty shelf?
- deleted 7y ago[deleted]
- mandelbrotwurst 7y ago> High prices induce production that would not have occurred otherwise. They also curve demand downwards so that only those who really want the item will get it. These are good points. > There is little reason to outlaw price gouging save for humans have a disgust response to people who profit from tragic events. There is at least one reason: Setting a price ceiling means that the distribution of the good will be tilted more towards those with less financial capital than it would be if the price were allowed to climb further. I believe this is a point that many care about for a number of reasons. I'm not arguing that it's better if you are optimizing solely for maximizing total utility received from the supply of the good, but I would question whether that is necessarily the right course of action.