6 ms·

It doesn't have to be Jeff Bezos. At the start of the pandemic in the US there were plenty of stories of bad actors leveraging their credit to buy up high deman

by ssully 6y ago

It doesn't have to be Jeff Bezos. At the start of the pandemic in the US there were plenty of stories of bad actors leveraging their credit to buy up high demands items (toilet paper, hand sanitizer, etc) all around their local area and selling it at a premium online.

xyzzyz 6y ago
So the goalpost has been moved from ultra wealthy to anyone with a $2k limit credit card. There is actually an easy way to make it hard for anyone with a $2k credit card to buy up all the supplies: just allow supermarkets to raise the prices.
- TeMPOraL 6y ago
  The goalpost was placed wrongly, likely by accident. It's rather obvious the problem are the people with a $2k credit card who want to profiteer off a crisis, of whom there's much more than the ultra-rich, and who have much stronger incentives to buy up the supply. > allow supermarkets to raise the prices. That would just price out anyone without $2k credit.
  - AnthonyMouse 6y ago
    > It's rather obvious the problem are the people with a $2k credit card who want to profiteer off a crisis If the store itself is allowed to raise prices then there is no opportunity for profiteering because they'd have to pay the store the market price to begin with. The arbitrage opportunity only exists as a result of the price controls. > That would just price out anyone without $2k credit. It would price them out of buying out the whole store, not price them out of buying a few for their own use.
    - TeMPOraL 6y ago
      It's not the arbitrage that's the problem, it's the high prices - no matter whether it's the store or a speculator that sells them. The way I see it, distributing universally needed goods in a crisis is about flattening the distribution of wealth one has vs. amount of goods one can get. Usually competition provides a downward pressure, but I think this fails in times of sudden demand shifts. As long as either the shop or the reseller can expect the demand to be stronger tomorrow than it is today, they have every reason to hold onto their stock and keep rising prices. Eventually, a peak is reached, all those pent-up stock starts getting unloaded on the market, prices go down - but this evolution takes time, and throughout all this, a lot of people cannot afford to buy the good. So it seems better to me to prevent prices from going up, in order to prevent the least wealthy from being priced out of buying emergency supplies, and at the same time eliminate the main incentive for excessive hoarding: the ability to sell the hoard back later, at a profit.
      - AnthonyMouse 6y ago
        > It's not the arbitrage that's the problem, it's the high prices - no matter whether it's the store or a speculator that sells them. The price controls actually make the price higher, because then the normal channels run out of supply and if you need it you have to turn to the black market. The black market prices are higher both because the people who didn't need it very much but lucked into official supply weren't deterred by pricing (wasting supply) and because the black market operators can collect a risk premium for breaking the rules. > As long as either the shop or the reseller can expect the demand to be stronger tomorrow than it is today, they have every reason to hold onto their stock and keep rising prices. If they expect the price to be higher tomorrow then all they have to do is demand that price today. You can still get it from them. And that's what you want, because if the shortage is going to get worse rather than better over time then you want the higher prices immediately to induce rationing and avoid an even worse shortage in the near future. > So it seems better to me to prevent prices from going up, in order to prevent the least wealthy from being priced out of buying emergency supplies The assumption is that this actually happens. If the price of a mask triples from $1.50 to $4.50, even someone making minimum wage can afford a mask, or even ten masks, if they really need them. If they don't really need them then they may be deterred by the price, but that's the whole point. > and at the same time eliminate the main incentive for excessive hoarding: the ability to sell the hoard back later, at a profit. Which the high prices do by themselves. Paying an extra $30 for ten masks is one thing, but the hoarder who had been intent on buying ten thousand then has to pay a premium of $30,000, which leaves them with all risk and no profit.
        bb88 6y ago
        > Paying an extra $30 for ten masks is one thing, but the hoarder who had been intent on buying ten thousand then has to pay a premium of $30,000, which leaves them with all risk and no profit. That assumes the price is stable or near the peak. But if the price curve is rising, that's no different than a stock that's going up, is it? You're still buying low and selling high. If the price goes up $10/week for 30 masks, you're making money by hoarding them.
        6y ago
    - 8note 6y ago
      The arbitrage opportunity also relies on the store letting someone buy all of their stock

by ssully 6y ago

xyzzyz 6y ago

So the goalpost has been moved from ultra wealthy to anyone with a $2k limit credit card. There is actually an easy way to make it hard for anyone with a $2k credit card to buy up all the supplies: just allow supermarkets to raise the prices.

TeMPOraL 6y ago
The goalpost was placed wrongly, likely by accident. It's rather obvious the problem are the people with a $2k credit card who want to profiteer off a crisis, of whom there's much more than the ultra-rich, and who have much stronger incentives to buy up the supply. > allow supermarkets to raise the prices. That would just price out anyone without $2k credit.
- AnthonyMouse 6y ago
  > It's rather obvious the problem are the people with a $2k credit card who want to profiteer off a crisis If the store itself is allowed to raise prices then there is no opportunity for profiteering because they'd have to pay the store the market price to begin with. The arbitrage opportunity only exists as a result of the price controls. > That would just price out anyone without $2k credit. It would price them out of buying out the whole store, not price them out of buying a few for their own use.
  - TeMPOraL 6y ago
    It's not the arbitrage that's the problem, it's the high prices - no matter whether it's the store or a speculator that sells them. The way I see it, distributing universally needed goods in a crisis is about flattening the distribution of wealth one has vs. amount of goods one can get. Usually competition provides a downward pressure, but I think this fails in times of sudden demand shifts. As long as either the shop or the reseller can expect the demand to be stronger tomorrow than it is today, they have every reason to hold onto their stock and keep rising prices. Eventually, a peak is reached, all those pent-up stock starts getting unloaded on the market, prices go down - but this evolution takes time, and throughout all this, a lot of people cannot afford to buy the good. So it seems better to me to prevent prices from going up, in order to prevent the least wealthy from being priced out of buying emergency supplies, and at the same time eliminate the main incentive for excessive hoarding: the ability to sell the hoard back later, at a profit.
    - AnthonyMouse 6y ago
      > It's not the arbitrage that's the problem, it's the high prices - no matter whether it's the store or a speculator that sells them. The price controls actually make the price higher, because then the normal channels run out of supply and if you need it you have to turn to the black market. The black market prices are higher both because the people who didn't need it very much but lucked into official supply weren't deterred by pricing (wasting supply) and because the black market operators can collect a risk premium for breaking the rules. > As long as either the shop or the reseller can expect the demand to be stronger tomorrow than it is today, they have every reason to hold onto their stock and keep rising prices. If they expect the price to be higher tomorrow then all they have to do is demand that price today. You can still get it from them. And that's what you want, because if the shortage is going to get worse rather than better over time then you want the higher prices immediately to induce rationing and avoid an even worse shortage in the near future. > So it seems better to me to prevent prices from going up, in order to prevent the least wealthy from being priced out of buying emergency supplies The assumption is that this actually happens. If the price of a mask triples from $1.50 to $4.50, even someone making minimum wage can afford a mask, or even ten masks, if they really need them. If they don't really need them then they may be deterred by the price, but that's the whole point. > and at the same time eliminate the main incentive for excessive hoarding: the ability to sell the hoard back later, at a profit. Which the high prices do by themselves. Paying an extra $30 for ten masks is one thing, but the hoarder who had been intent on buying ten thousand then has to pay a premium of $30,000, which leaves them with all risk and no profit.
      - bb88 6y ago
        > Paying an extra $30 for ten masks is one thing, but the hoarder who had been intent on buying ten thousand then has to pay a premium of $30,000, which leaves them with all risk and no profit. That assumes the price is stable or near the peak. But if the price curve is rising, that's no different than a stock that's going up, is it? You're still buying low and selling high. If the price goes up $10/week for 30 masks, you're making money by hoarding them.
        6y ago
  - 8note 6y ago
    The arbitrage opportunity also relies on the store letting someone buy all of their stock