2 ms·
This is true in theory. In practice, as has been seen with Covid PPE, the price "gouging" threshold is sometimes set below the cost of production (due to fixed
by gowld 6y ago
This is true in theory. In practice, as has been seen with Covid PPE, the price "gouging" threshold is sometimes set below the cost of production (due to fixed startup capital costs), preventing production. This paradox is severe for products with low marginal cost but high fixed cost, which is most things nowadays thanks to modern economy of scale.
Price laws are per unit, but peoduction costs are amortized across a whole production lifetime, and the difference between "X units per month for 10 years" is quite different from "10X units per month for 1 month" is substantial.
- naravara 6y ago>n practice, as has been seen with Covid PPE, the price "gouging" threshold is sometimes set below the cost of production (due to fixed startup capital costs), preventing production. If it was actually socially important you could just. . . pay for it out of the public funds as a form of emergency assistance or social insurance. Why enable retailers to gouge and exploit the most vulnerable people when you could just have everyone pitch in to fill the gap?
- pgwhalen 6y agoAny source on that happening with Covid PPE? I’d love to read about it.