4 ms·
You're mixing long-run and short-run economics. Factories and producers do not react to 'spikes'. When the time required to tool/re-tool is considerably longer
by jariel 6y ago
You're mixing long-run and short-run economics.
Factories and producers do not react to 'spikes'. When the time required to tool/re-tool is considerably longer than market corrections, then this goes out the window.
Gouging is a thing, it's definitely not in Amazon's interest to allow it to happen, they make really not much more and the blow-back could be bad.
- chillacy 6y agoTo draw an analogy to the stock markets, long term growth or decline based on fundamentals is the market pricing a company’s profit potential. Gouging is something more like a short term pump and dump scheme. The SEC doesn’t appreciate the latter and has mechanisms in place to prevent them.
- erik_seaberg 6y agoThey didn't scale up the factory (or more likely the warehouse) because they knew the price would never be allowed to rise enough to pay off the investment. You have to charge extra for dipping into reserve capacity if you're going to compete with the leanest vendors who have none.