Costco doesn’t send generators 250 miles away from the site of a natural disaster; I know this for a fact I’ve worked in supply chain for a fortune 50 company that sells, among other things, generators. We house emergency response materials centrally and deploy them as needed. Used car dealers who sell MYs for 20K over list aren’t price gouging they are taking advantage of a consumers willingness to pay a premium to jump in line and receive a luxury item immediately; it’s leveraging opportunity costs. It’s like when I was in college one of the sororities would go to Krispy Kreme and buy like a 100 dozen donuts for $3 a dozen and then have their pledges wait outside the bars at closing time and sell em for $2 a donut. It’s taking advantage of an opportunity cost but it’s not gouging. I’m not gonna die or suffer without a donut, I put myself in the position of craving a donut by going out and getting drunk, and I probably have a reasonable alternative to said donut if I’m just willing to wait until i get back to my apartment. The examples you’ve given, that you argue are not gouging, are literally what they use to teach freshmen in Econ 101 what gouging is.
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Used Model Y Price Gouging
- Thread starter ElectricNerd
- Start date
It’s called public welfare doc; it’s what happens on the left side of the intersection between the demand and supply curves. It how we’ve dealt with these kind of scenarios since Adam Smith was using a quill.
There is a buyer for everything!
Someone will buy it to save on gas
Does it make financial sense - NO. Does person have money that depreciate daily - YES. Does person want it now vs Jan 2023 - YES. SOLD!
Plus $3k raise justifies it even more. Car was $49k at lowest price point a year and 4 month later it added $17k.
Who knows maybe in a year $80k will be a bargain!
Someone will buy it to save on gas
Does it make financial sense - NO. Does person have money that depreciate daily - YES. Does person want it now vs Jan 2023 - YES. SOLD!
Plus $3k raise justifies it even more. Car was $49k at lowest price point a year and 4 month later it added $17k.
Who knows maybe in a year $80k will be a bargain!
There is a buyer for everything!
Someone will buy it to save on gas
Does it make financial sense - NO. Does person have money that depreciate daily - YES. Does person want it now vs Jan 2023 - YES. SOLD!
Plus $3k raise justifies it even more. Car was $49k at lowest price point a year and 4 month later it added $17k.
A free market is always correct
sleepydoc
Well-Known Member
Usually but not always - the supply demand curve that we all learn in junior high makes several assumptions. If those assumptions aren't true then the normal free market principles don't necessarily apply.A free market is always correct
Lucas007
Member
sleepydoc
Well-Known Member
A key one is that the purchase is voluntary. Insulin is a good example - the price of insulin was in the news a few years ago. If a type 1 diabetic doesn’t have insulin, they die. If I’m the only maker of insulin, should I be allowed to charge whatever I want? Even if it only costs me $1 per vial to make, I know people will pay the money to stay alive so should I be allowed to charge $1000 per vial? (It actually gets more complicated than that but I’m keeping it simple for the sake of argument.)
In the generator example, There’s a large number of people who need generators. It may be for comfort just to run a fan because the AC is out or it may be more critical like needing to power a well to get water or charge the batteries for your ventricular assist device. Regardless, these people are in a situation in which the loss of a public utility has suddenly made a generator a necessity. It’s no longer a free and balanced market.
You complained that ‘the gestapo’ wouldn’t let stores raise their prices so you had to drive a distance to find a generator. Is is possible that there were simply so many people who needed a generator that the demand far outstripped supply? If stores had been able to raise their prices so the generators were $5000 instead of $500 and you couldn’t afford one would that have been any better? From a societal perspective, should wealth be the determining factor in whether and how you survive a natural disaster?
Last edited:
1. Your drug example is a little more nuanced, but.... Insulin is not a proprietary, patent protected drug. If not threatened by Government with being Criminal Price Gougers, there are many drug manufactures who could switch their production to insulin...but, that costs lots of MONEY. If they can't charge whatever the market will bear without being labeled "GOUGERS", the incentive to expend the effort and cost to switch disappears. Result...sustained shortage. A proprietary, patent protected life saving drug is a different animal and to me this is an area that Government should step in to subsidize the price until the patent holder can increase production or the patent expires.
2. There were NO $500 generators within 200 miles of me during the last major hurricane. Because GOVERNMENT decided to threaten to go after anyone who dared raise prices (nasty price gougers), there was NO incentive to spend the extra money and time to bring generators to Florida. There are plenty of truck drivers who could have gone to Georgia, bought truck loads of $500 generators and transported them to Florida. There were thousands of people willing to pay additional money for them. But noooo, we're from the Government and we are here to help you and protect you from nasty price gougers. So, sweat awhile peons, lose your refrigerator and freezer contents but smile and be happy.
3. I'll answer these with some questions myself. Of course DEMAND was swamping the available supply. And, just as nature abhors a vacuum, SUPPLY abhors a demand it can't fill. When government gets in the way of the free market, demand doesn't get filled, it is just hung out to dry. To your last point... is it my responsibility to pay for your lack of planning? Or ability to earn enough money? Should societal mind set be "from each according to their ability, to each according to their need"? By the way, I need a Model S PLAID....but sadly can't afford it. So there's that. If wealth isn't going determine your ability to deal with what comes your way, what will? Good looks per chance? (I'm destined to be a pauper then). Personality maybe? Being nancy Pelosi's husband when you get a DUI?
The truly needy due to injury, being handicapped etc. is when government DOES need to step in and help. Otherwise let the free market do it's thing!
"A free market is always correct." This statement shows, as suggested, a junior high level understanding of capitalism.
The gotcha with switching to insulin is not money, but time. Getting FDA signoff on a production line for any product for human consumption is really slow, really difficult, and it would not make business sense to do without certainty around return. This is the problem for all of the tiny market drugs in which the customers will/may die without it. Insulin is a much bigger market, but the barriers to entry still protect it against true competition. We could instead remove those barriers, or not actually inspect the production lines, and then we get more examples as we've seen with infant formula coming from China, or pet food that kills our animals. Many of the Chinese manufacturers are much more free market than we are, but few of us want the consequences.
You keep harping about generators, but the reality is that there would not be generators at any price after a hurricane. Because the odds of the event are (fairly) low, Floridians don't buy them in advance for insurance and stores don't stock them in such inventory. The opportunity costs are perceived to be too high. But then when it does happen, lots of people are without power, and some will be a risk of health issues or death. Your solution of 'let the richest people pay excess pricing' doesn't improve upon that result. It would just encourage retailers to not sell any of their inventory when there is a hurricane watch, or for speculators to buy up the inventory with the intent to either sell for 5x or 10x the price, or return if the disaster does not occur.
BTW, how would you feel if gas and diesel providers in Florida decided to mark up fuel to $50/gallon? Fuel deliveries are impacted in these disasters so they should be allowed to maximize their profits, right?
We all got a good look at hording and price gouging during the first year of covid. People buying up all hand sanitizer, people buying years worth of toilet paper and months worth of milk, thereby creating the exact shortage they feared. This is what the free market can lead to. The freedom for lots of short sided decisions leading to a negative overall result. In time, market forces may correct, but only when all external costs are considered. That is rarely the case, so we continue to see oil spills in the Gulf as drillers and the fossil fuel industry overall doesn't need to consider pollution as a cost. The US subsidies FFs to the tune of over half a trillion dollars per year.
You should look up 'tragedy of the commons' and the 'prisoner's dilemma.' Economists and game theorists have been discussing these defects of the free market for centuries.
:max_bytes(150000):strip_icc()/prisoners-dilemma-2-56a27d973df78cf77276a49f.jpg)
What Is the Prisoner's Dilemma and How Does It Work?
The prisoner's dilemma is a paradox in decision analysis in which two individuals acting in their own self-interests do not produce the optimal outcome.
There is so much wrong here that I don't even know where to start, so I won't. I'll just stick to with what someone else said in a earlier post... "Supply, meet Demand""A free market is always correct." This statement shows, as suggested, a junior high level understanding of capitalism.
The gotcha with switching to insulin is not money, but time. Getting FDA signoff on a production line for any product for human consumption is really slow, really difficult, and it would not make business sense to do without certainty around return. This is the problem for all of the tiny market drugs in which the customers will/may die without it. Insulin is a much bigger market, but the barriers to entry still protect it against true competition. We could instead remove those barriers, or not actually inspect the production lines, and then we get more examples as we've seen with infant formula coming from China, or pet food that kills our animals. Many of the Chinese manufacturers are much more free market than we are, but few of us want the consequences.
You keep harping about generators, but the reality is that there would not be generators at any price after a hurricane. Because the odds of the event are (fairly) low, Floridians don't buy them in advance for insurance and stores don't stock them in such inventory. The opportunity costs are perceived to be too high. But then when it does happen, lots of people are without power, and some will be a risk of health issues or death. Your solution of 'let the richest people pay excess pricing' doesn't improve upon that result. It would just encourage retailers to not sell any of their inventory when there is a hurricane watch, or for speculators to buy up the inventory with the intent to either sell for 5x or 10x the price, or return if the disaster does not occur.
BTW, how would you feel if gas and diesel providers in Florida decided to mark up fuel to $50/gallon? Fuel deliveries are impacted in these disasters so they should be allowed to maximize their profits, right?
We all got a good look at hording and price gouging during the first year of covid. People buying up all hand sanitizer, people buying years worth of toilet paper and months worth of milk, thereby creating the exact shortage they feared. This is what the free market can lead to. The freedom for lots of short sided decisions leading to a negative overall result. In time, market forces may correct, but only when all external costs are considered. That is rarely the case, so we continue to see oil spills in the Gulf as drillers and the fossil fuel industry overall doesn't need to consider pollution as a cost. The US subsidies FFs to the tune of over half a trillion dollars per year.
You should look up 'tragedy of the commons' and the 'prisoner's dilemma.' Economists and game theorists have been discussing these defects of the free market for centuries.
What Is the Prisoner's Dilemma and How Does It Work?
The prisoner's dilemma is a paradox in decision analysis in which two individuals acting in their own self-interests do not produce the optimal outcome.www.investopedia.com
sleepydoc
Well-Known Member
sleepydoc
Well-Known Member
Well, I have a BS in economics and I gave up on this discussion a while ago.