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> Two problems; factories cannot surge up immediately and all of the actual gouging here is not actually making it to the manufacturers, it's people mass buyin
by generalpass 7y ago
> Two problems; factories cannot surge up immediately and all of the actual gouging here is not actually making it to the manufacturers, it's people mass buying out stocks and reselling. So the supply side isn't actually seeing any increased price to increase their supply. The Econ 101 pro price gouging logic breaks down here because of that.
This may be due to the fact that the retailers are heavily threatened by government action, so they take no action to increase prices.
Contrast this with the must-have Christmas toy, which may otherwise be seeing similar unanticipated demand and suddenly the same retailers are incredible pricing experts.
The factories will need to maintain long-term relationships with these retailers and they may also have similar threats from government action.
More likely is that whatever slack there is in the supply chain will be exported to countries which have no such price control policies, because price-control policies do not address the underlying issues of supply and demand.
- rtkwe 7y agoSome items like toilet paper have and extremely flat demand pattern it turns out, so plants are already running basically at capacity 24/7 so there's not much actual slack in the supply chain to increase. https://www.latimes.com/business/story/2020-03-14/coronavirus-will-we-run-out-of-toilet-paper https://www.latimes.com/business/story/2020-03-14/coronaviru...