3 ms·

Agreed. Is it better to have water available for $10 a bottle, or no water available?

chii 6y ago
> no water available? but it's not "no water available", but that the seller knows the value of water has grown due to an unavoidable problem (e.g., natural disaster). And without state intervention, the freemarket is gonna cause the price to skyrocket. As a society, people have decided that it's wrong for price gauging.
- gwd 6y ago
  OK, but the other side of the coin is this: Water shortages due to unavoidable circumstances happen from time to time. It's good for society to have stockpiles of water in those situations. But here's the thing: storing that excess water isn't free. Water is already commoditized, which means it's low-margin. If you as a private business, stockpile water for an emergency but can't charge more, you're probably selling at a loss. Which means, it's not economically sustainable to stockpile -- which means, absent the government planning ahead, shortages are going to be pretty bad. On the other hand, if you know that you can charge 4x for a bottle of water during an emergency, then you might decide to stockpile, knowing you can make your money back when an emergency happens. So which is worse -- "price gouging" but having the water available, or not having the water available at all? Or to put it a different way: Stockpiling for emergencies is not free, and it's of value to society. Doesn't it make sense to compensate the people who do it?
  - MikeTheGreat 6y ago
    What about this counter-counter-argument: These companies sell water at $X/bottle right now under normal circumstances, and they make a profit (otherwise they wouldn't be doing it). During a disaster they can keep selling at $X/bottle and keep making a profit, only with the higher demand they can now sell a whole lot more of them. So they can make a lot of money selling an in-demand item during a disaster WITHOUT price gouging.
    - iguy 6y ago
      > only with the higher demand they can now sell a whole lot more of them But they can only sell what they have in stock, which is adjusted to normal times. In the disaster they simply sell out. GP is saying the high prices in a disaster are an incentive to make various investments which won't pay off in normal times.
      - aspenmayer 6y ago
        Just in time supply chains are especially susceptible to demand shocks.
    - aidenn0 6y ago
      Or they could pay truck drivers a bonus to drive towards a disaster area with water rather than away from the disaster area.
    - gregmac 6y ago
      >> storing that excess water isn't free. Water is already commoditized, which means it's low-margin. If you as a private business, stockpile water for an emergency but can't charge more, you're probably selling at a loss. > During a disaster they can keep selling at $X/bottle and keep making a profit You ignored the point of the person you're replying to. This applies to the entire supply chain, too. If there's any disruption (including increased demand), it's the stockpiles -- anyone that stores inventory beyond what they sell regularly -- that compensate. No one is obligated to do this, and there are significant carrying costs to store inventory (space, spoilage, capital tied up).

chii 6y ago

> no water available? but it's not "no water available", but that the seller knows the value of water has grown due to an unavoidable problem (e.g., natural disaster). And without state intervention, the freemarket is gonna cause the price to skyrocket. As a society, people have decided that it's wrong for price gauging.

gwd 6y ago
OK, but the other side of the coin is this: Water shortages due to unavoidable circumstances happen from time to time. It's good for society to have stockpiles of water in those situations. But here's the thing: storing that excess water isn't free. Water is already commoditized, which means it's low-margin. If you as a private business, stockpile water for an emergency but can't charge more, you're probably selling at a loss. Which means, it's not economically sustainable to stockpile -- which means, absent the government planning ahead, shortages are going to be pretty bad. On the other hand, if you know that you can charge 4x for a bottle of water during an emergency, then you might decide to stockpile, knowing you can make your money back when an emergency happens. So which is worse -- "price gouging" but having the water available, or not having the water available at all? Or to put it a different way: Stockpiling for emergencies is not free, and it's of value to society. Doesn't it make sense to compensate the people who do it?
- MikeTheGreat 6y ago
  What about this counter-counter-argument: These companies sell water at $X/bottle right now under normal circumstances, and they make a profit (otherwise they wouldn't be doing it). During a disaster they can keep selling at $X/bottle and keep making a profit, only with the higher demand they can now sell a whole lot more of them. So they can make a lot of money selling an in-demand item during a disaster WITHOUT price gouging.
  - iguy 6y ago
    > only with the higher demand they can now sell a whole lot more of them But they can only sell what they have in stock, which is adjusted to normal times. In the disaster they simply sell out. GP is saying the high prices in a disaster are an incentive to make various investments which won't pay off in normal times.
    - aspenmayer 6y ago
      Just in time supply chains are especially susceptible to demand shocks.
  - aidenn0 6y ago
    Or they could pay truck drivers a bonus to drive towards a disaster area with water rather than away from the disaster area.
  - gregmac 6y ago
    >> storing that excess water isn't free. Water is already commoditized, which means it's low-margin. If you as a private business, stockpile water for an emergency but can't charge more, you're probably selling at a loss. > During a disaster they can keep selling at $X/bottle and keep making a profit You ignored the point of the person you're replying to. This applies to the entire supply chain, too. If there's any disruption (including increased demand), it's the stockpiles -- anyone that stores inventory beyond what they sell regularly -- that compensate. No one is obligated to do this, and there are significant carrying costs to store inventory (space, spoilage, capital tied up).