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When supply is fixed the price gouging serves as an important mechanism promoting efficient use of it. If a 30 oz bottle of hand sanitizer costs $50 then everyo

by mamon 6y ago

When supply is fixed the price gouging serves as an important mechanism promoting efficient use of it. If a 30 oz bottle of hand sanitizer costs $50 then everyone would ask themselves: "Do I REALLY need 5 bottles of it?"

TeMPOraL 6y ago
That kind of reasoning only works when all the things you need add up to roughly all the money you have. Otherwise, the rich person will say, "fuck it, I'll take 5", while countless of poor people won't be able to afford any.
- zo1 6y ago
  If we're that concerned about the poor people, then maybe our laws should rather ignore price gauging and instead focus on implementing government-run distribution and storage centers for the inevitable emergency so that everyone can get their basic supplies. I can buy the argument that we don't like the way that a free market would solve this problem. But then we have to actually put down something reasonably-likely to work in its stead. Right now we have neither (whilst the poor suffer), and we're blaming the side that's saying "leave it alone, the market can kinda fix it".
  - TeMPOraL 6y ago
    So with anti-price-gouging laws, we're making a bet that rich people are more constrained by the ability to use certain items than they are constrained by money. That is, if they can't buy up the supply and resell it at absurd prices, they have no reason to buy more than they truly need, so the goods remain available to more people in need, at lower price. I do like the idea of government-run emergency stockpiles, and rationed distribution of those. But then, I have a feeling that people who want price gouging to be allowed are also the people who, in times of calm, complain about government being fat, and demand the emergency stockpiles to be cut down.
IanCal 6y ago
Efficient if people broadly have the same wealth. It's not efficient for me to buy hand sanitizer I barely need at the expense of care workers who do.
e5india 6y ago
How does that line of thinking work with something like baby formula? If I have a hungry baby now, what good does it do me if I have to wait two weeks because I'm priced out of baby formula today? In emergency situations we pretty much already know what peoples needs generally are. We don't need price as a market mechanism to know people need access to food water etc. Additionally, price gouging is sending artificial pricing signals. The rise in price is not the result of organic demand but people taking advantage of a short term supply constraint, so if I'm a manufacturer/distributor I can't react to this rise in prices the same way I would in a normally functioning economy. I may not even be able to.
- kyboren 6y ago
  The rise in price is the result of the market thinking there will be future rise in organic demand. The price rises because the value rises. There's nothing artificial about it. That tug-on-your-heartstrings argument works the other way around, too: If I have a hungry baby now, but despite whatever wealth I have I can't find any in stores because price controls have resulted in a chronic shortage, what good does it do me that some people can buy baby formula at an artificially reduced price?
  - naravara 6y ago
    > The rise in price is the result of the market thinking there will be future rise in organic demand. In a disaster situation there won’t be a future rise in organic demand so the market has no incentive to actually adjust. Price gouging doesn’t change that. The only meaningful effect is that you’re either distributing finite resources by raffle or by ability to pay. (Or by ration ticket if your government has its shit together enough to set something like that up). I don’t know any ethical framework that thinks ability to pay is the optimal distribution scheme there. Kantians would opt for a raffle as it values people as ends in themselves rather than as money havers. Utilitarians would opt for a raffle as random chance is more likely to distribute goods to their most valued uses than distribution according to the wealthiest. Rawlsians would opt for a raffle because if you apply a veil of ignorance where nobody knows how much money they have before the situation starts, everyone would conclude the raffle is more fair.
xfer 6y ago
Or the people that can afford it buy 100s of them and sell for even higher price to the people who might need one.

by mamon 6y ago

TeMPOraL 6y ago

That kind of reasoning only works when all the things you need add up to roughly all the money you have. Otherwise, the rich person will say, "fuck it, I'll take 5", while countless of poor people won't be able to afford any.

zo1 6y ago
If we're that concerned about the poor people, then maybe our laws should rather ignore price gauging and instead focus on implementing government-run distribution and storage centers for the inevitable emergency so that everyone can get their basic supplies. I can buy the argument that we don't like the way that a free market would solve this problem. But then we have to actually put down something reasonably-likely to work in its stead. Right now we have neither (whilst the poor suffer), and we're blaming the side that's saying "leave it alone, the market can kinda fix it".
- TeMPOraL 6y ago
  So with anti-price-gouging laws, we're making a bet that rich people are more constrained by the ability to use certain items than they are constrained by money. That is, if they can't buy up the supply and resell it at absurd prices, they have no reason to buy more than they truly need, so the goods remain available to more people in need, at lower price. I do like the idea of government-run emergency stockpiles, and rationed distribution of those. But then, I have a feeling that people who want price gouging to be allowed are also the people who, in times of calm, complain about government being fat, and demand the emergency stockpiles to be cut down.

IanCal 6y ago

Efficient if people broadly have the same wealth. It's not efficient for me to buy hand sanitizer I barely need at the expense of care workers who do.

e5india 6y ago

How does that line of thinking work with something like baby formula? If I have a hungry baby now, what good does it do me if I have to wait two weeks because I'm priced out of baby formula today? In emergency situations we pretty much already know what peoples needs generally are. We don't need price as a market mechanism to know people need access to food water etc. Additionally, price gouging is sending artificial pricing signals. The rise in price is not the result of organic demand but people taking advantage of a short term supply constraint, so if I'm a manufacturer/distributor I can't react to this rise in prices the same way I would in a normally functioning economy. I may not even be able to.

kyboren 6y ago
The rise in price is the result of the market thinking there will be future rise in organic demand. The price rises because the value rises. There's nothing artificial about it. That tug-on-your-heartstrings argument works the other way around, too: If I have a hungry baby now, but despite whatever wealth I have I can't find any in stores because price controls have resulted in a chronic shortage, what good does it do me that some people can buy baby formula at an artificially reduced price?
- naravara 6y ago
  > The rise in price is the result of the market thinking there will be future rise in organic demand. In a disaster situation there won’t be a future rise in organic demand so the market has no incentive to actually adjust. Price gouging doesn’t change that. The only meaningful effect is that you’re either distributing finite resources by raffle or by ability to pay. (Or by ration ticket if your government has its shit together enough to set something like that up). I don’t know any ethical framework that thinks ability to pay is the optimal distribution scheme there. Kantians would opt for a raffle as it values people as ends in themselves rather than as money havers. Utilitarians would opt for a raffle as random chance is more likely to distribute goods to their most valued uses than distribution according to the wealthiest. Rawlsians would opt for a raffle because if you apply a veil of ignorance where nobody knows how much money they have before the situation starts, everyone would conclude the raffle is more fair.

xfer 6y ago

Or the people that can afford it buy 100s of them and sell for even higher price to the people who might need one.