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I have been considering the following business thought-experiment: Price Gougers: a company whose goal is explicit in its name. What you need will always be in
by ISL 7y ago
I have been considering the following business thought-experiment:
Price Gougers: a company whose goal is explicit in its name. What you need will always be in stock, but it will always be expensive. It is the kind of company that could ensure that, in situations like this, there might be more N95 masks and hand sanitizer in global inventory.
Could such a company get enough social buy-in to survive in the face of anti-price-gouging laws that appear with every crisis?
If a person/company had stockpiled N95s a year ago, with intent to sell them at a markup in the event of a pandemic, could that entity ever hope to be repaid for its beneficial risk-taking?
(I'll also point out that I'm considering donating most of our few household N95s to our nearby medical center, and am angling to get our research laboratory to do the same. This thought-experiment arises from the fact that investors won't deploy capital to do this kind of thing at scale unless they expect to see a return.)
- myself248 7y agoI sort of love this idea. It'd be the perfect test of some free-market ideals. Similarly, sometimes the government buys product above the lowest market price, because it's produced domestically and it's strategic to prop up the production in case of an event like this. They failed in this case, sadly.
- ISL 7y agoPerhaps pre-designated "price-gouging" companies could be allowed to price-gouge (and might be forbidden to buy up remaining traditional supply once an impending disaster is apparent?), but the person on the street could not? It just seems like there should be some middle ground between, "Price-gouging should be banned!", and "My kingdom for an N95 mask!".
- eru 7y agoWhat's the point? Just allow people to pay the prices they want to pay and sell at. Why add more special licences to exclude the person on the street?
- learn_more 7y agoUnfortunately, such a company would be a lightning rod for the mob's ire as the downvotes to this comment so clearly illustrates.
- jccooper 7y agoPrice gouging laws in some states cover an increase in prices in response to an emergency. If your prices were always high, that might work in a few places, but many are "average price" or poorly defined. Some states are also "an exorbitant or excessive price for a necessity", and you're always a target for "because we say so" enforcement, so it would be a pretty dangerous business.
- eru 7y agoPeople (and some laws) don't seem to like this sensible idea. But you might be able to achieve something close enough via price differentiation. So you might sell two kinds of hand sanitizer. One is the normal kind that sells for a normal price. The other one is the gold plated one that sells for a ridiculous price. Normally, you only sell significant quantities of the normal one. In an emergency, the normal one will sell out, and people will start buying the gold plated one. The gold plating can be anything. Even just different branding for same ingredients. You never officially fiddle with your prices, but the average price you charge per bottle will naturally go up.
- salawat 7y agoThe issue you'll run into is that in an emergency where survival of the Marketplace is in question, the rules of the Market slip in deference to getting the job done to restore normality. It's the same reason people were livid in California during the fires they had when Verizon (I think?) Was being stingy in regards to provisioning firefighters with enough bandwidth for their C-n-C. It's a fairly American ideal, even if it hasn't had the spotlight shone on it in a while. You're either helping to clean up the mess, or you're part of the problem, and had best be prepared to get out of the way. It's nice to see we haven't totally lost our grip on it.