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> the rise in price incentivises the market to produce more of the product / incentivises more producers to enter the market I really don't see evidence that i

by geofft 7y ago

> the rise in price incentivises the market to produce more of the product / incentivises more producers to enter the market I really don't see evidence that it does. Remember that there are two steps here: production and retail sale. It certainly incentivizes price-gouging resellers to collect more of the product and incentivizes people to become resellers - see the various folks who are "hustling" by buying out their local Costco and reselling online for a markup. I haven't seen evidence that e.g. Charmin is saying, "Thanks to higher prices, we're able to see more toilet paper" or "We're limited in supply, we're going to have to raise prices." That was the original point. At the top of the thread you're replying to: > These products are being made in sufficient quantity for everyone. There is not a significant decrease in production. There is a significant increase in hoarding, and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product. If you disagree with that, please present evidence of decreases in production / insufficient production / etc. There's been plenty of evidence in this comment section about the existence of profiteers. (Perhaps the confusion here is whether price-gouging laws prevent your local corner store from selling more expensive toilet paper if their actual wholesale cost goes up? I would think they don't, and I would in fact agree that they should not and such a law would be a bad thing. It should prevent them from charging more markup, and either it should prevent them from buying from opportunistic intermediaries who are charging them more or it should apply to such intermediaries directly.)

stale2002 7y ago
> haven't seen evidence that e.g. Charmin is saying, "Thanks to higher prices, we're able to see more toilet paper" Do you honestly believe that manufacturers are currently at 100% capacity, and have been at 100% capacity for years? That's ridiculous. Manufacturers always have spare capacity. One simple solution is that they can increase hours that the factory runs (ex, by giving overtime pay). Or they can delay upgrades/maintenance to keep things running longer, or any number of things. > If you disagree with that, please present evidence of decreases in production You are the one who is making the claim that manufacturers have somehow been in a perpetual state of 100% capacity. That is an insanely strong claim to make. The idea that it is impossibility for manufacturers to take any action at all to increase capacity is the actual claim that would require evidence. You are also ignoring things such as the amount of supply that manufacturers have stocked up. If demand temporarily increases, then they can sell that stocked up supply, that is in warehouses, until they increase capacity. The world is not running out of toilet paper. Instead, what we are seeing, is temporary, local shortages, at stores, until the next shipment comes in. Those stores will just increase the number of shipments.
- geofft 7y ago
  I'm not claiming that manufacturers are at 100% capacity. I'm claiming (or more specifically, the person I quoted is claiming) that there isn't an underlying genuine shortage (i.e., that any inability to buy things in practice are caused by things other than "the product you want to buy literally hasn't been produced yet"), and so whether a manufacturer is at 100% capacity or 20%, they're still producing enough. That is, I think, the same claim you're making - that the world is not running out of toilet paper and all we have is local shortages. I'm also claiming that if a manufacturer is not at sufficient capacity to meet demand, the cause is something other than a need for the per-unit price to go up. Generally, as production increases, the cost of production per item goes down. I certainly agree that manufacturers can take plenty of actions to increase capacity - I do not agree that those actions necessarily require them to raise prices.
  - stale2002 7y ago
    > I'm not claiming that manufacturers are at 100% capacity. Cool. So that means that manufactures have spare capacity which they can use to make more product. So, there is no real problem here with everyone buying a bit of extra toilet paper. Manufacturers, will just use that spare capacity, to fulfill that demand. > the cause is something other than a need for the per-unit price to go up. Ah, here is the mistake. The extra capacity that I am talking about, still costs extra money to activate. IE, running the factory for longer hours requires overtime pay, as one example. That is how the increase in price would cause capacity to be used more, and for the local shortages to be solved faster. Marginal cost generally increases in the short term, as temporary, but expensive methods are used to reactive unused capacity. In the long term, cost per unit goes down, because of economics of scale. But in the short term, you have to do things like pay overtime pay, ect. The expensive short term costs are why the increase in price helps increase short term capacity.
    - geofft 7y ago
      > The extra capacity that I am talking about, still costs extra money to activate You're claiming that both a) not enough toilet paper exists to satisfy genuine demand b) in order to meet that demand, they need to raise prices I agree that it is theoretically possible that not enough toilet paper exists, and I agree that there exist ways to increase production that involve spending more money. Both of those are different from saying that in reality not enough toilet paper exists, and in reality manufacturers need (or even want) to increase capacity by increasing per-unit expenses. That's what my question is about. More importantly, those seem like testable claims. Again - have any toilet paper (or hand sanitizer, or whatever) manufacturers raised prices? Have any of them said that they're unable to supply enough to meet demand? Have any of them said they could meet demand better if they could raise prices? And back on topic, have any of them found themselves unable to raise prices because of price-gouging laws? I'm pretty sure that if a manufacturer raises prices, and if resellers pass that cost on to consumers (and do not disproportionately increase their margins), that isn't price gouging, and therefore resellers can actually charge more, and therefore they can actually accommodate manufacturers charging more, and so we have nothing to worry about. Do you disagree with that?

by geofft 7y ago

stale2002 7y ago

> haven't seen evidence that e.g. Charmin is saying, "Thanks to higher prices, we're able to see more toilet paper" Do you honestly believe that manufacturers are currently at 100% capacity, and have been at 100% capacity for years? That's ridiculous. Manufacturers always have spare capacity. One simple solution is that they can increase hours that the factory runs (ex, by giving overtime pay). Or they can delay upgrades/maintenance to keep things running longer, or any number of things. > If you disagree with that, please present evidence of decreases in production You are the one who is making the claim that manufacturers have somehow been in a perpetual state of 100% capacity. That is an insanely strong claim to make. The idea that it is impossibility for manufacturers to take any action at all to increase capacity is the actual claim that would require evidence. You are also ignoring things such as the amount of supply that manufacturers have stocked up. If demand temporarily increases, then they can sell that stocked up supply, that is in warehouses, until they increase capacity. The world is not running out of toilet paper. Instead, what we are seeing, is temporary, local shortages, at stores, until the next shipment comes in. Those stores will just increase the number of shipments.

geofft 7y ago
I'm not claiming that manufacturers are at 100% capacity. I'm claiming (or more specifically, the person I quoted is claiming) that there isn't an underlying genuine shortage (i.e., that any inability to buy things in practice are caused by things other than "the product you want to buy literally hasn't been produced yet"), and so whether a manufacturer is at 100% capacity or 20%, they're still producing enough. That is, I think, the same claim you're making - that the world is not running out of toilet paper and all we have is local shortages. I'm also claiming that if a manufacturer is not at sufficient capacity to meet demand, the cause is something other than a need for the per-unit price to go up. Generally, as production increases, the cost of production per item goes down. I certainly agree that manufacturers can take plenty of actions to increase capacity - I do not agree that those actions necessarily require them to raise prices.
- stale2002 7y ago
  > I'm not claiming that manufacturers are at 100% capacity. Cool. So that means that manufactures have spare capacity which they can use to make more product. So, there is no real problem here with everyone buying a bit of extra toilet paper. Manufacturers, will just use that spare capacity, to fulfill that demand. > the cause is something other than a need for the per-unit price to go up. Ah, here is the mistake. The extra capacity that I am talking about, still costs extra money to activate. IE, running the factory for longer hours requires overtime pay, as one example. That is how the increase in price would cause capacity to be used more, and for the local shortages to be solved faster. Marginal cost generally increases in the short term, as temporary, but expensive methods are used to reactive unused capacity. In the long term, cost per unit goes down, because of economics of scale. But in the short term, you have to do things like pay overtime pay, ect. The expensive short term costs are why the increase in price helps increase short term capacity.
  - geofft 7y ago
    > The extra capacity that I am talking about, still costs extra money to activate You're claiming that both a) not enough toilet paper exists to satisfy genuine demand b) in order to meet that demand, they need to raise prices I agree that it is theoretically possible that not enough toilet paper exists, and I agree that there exist ways to increase production that involve spending more money. Both of those are different from saying that in reality not enough toilet paper exists, and in reality manufacturers need (or even want) to increase capacity by increasing per-unit expenses. That's what my question is about. More importantly, those seem like testable claims. Again - have any toilet paper (or hand sanitizer, or whatever) manufacturers raised prices? Have any of them said that they're unable to supply enough to meet demand? Have any of them said they could meet demand better if they could raise prices? And back on topic, have any of them found themselves unable to raise prices because of price-gouging laws? I'm pretty sure that if a manufacturer raises prices, and if resellers pass that cost on to consumers (and do not disproportionately increase their margins), that isn't price gouging, and therefore resellers can actually charge more, and therefore they can actually accommodate manufacturers charging more, and so we have nothing to worry about. Do you disagree with that?