Quote:
Originally Posted by de captain
Is a guy who buys generators in the midwest and drives them to a natural disaster to sell them at a 2x markup price gouging? No. He's an entrepreneur. He has overhead and deserves to be compensated for his time, risk, investment, short term increased cost of doing business, and foresight. Charging 2x for his generators is reasonable and not price gouging.
Is a store in Florida that marks the price of it's existing inventory up by 10x, because people desperately need it due to an unavoidable natural disaster, price gouging? Abso****inglutely.
You implied you would provide a working definition of price gouging but you didn't. You just provided two anecdotal examples, one of which you say is completely reasonable and not at all price gouging, but you fail to note that the government calls this price gouging, which is what we're debating here. The other example is a scenario you clearly made up to make a point but which is not something we've heard any reports of. So you support repealing the current price gouging laws, but you are in favor of prohibiting pricing that didn't happen and is extremely unlikely to happen.
If it was legal to raise prices 10x, no store would actually be able to make that much margin for any conceivable length of time. Other businesses and entrepreneurs would quickly push to supply the goods to make substantial profits, which would drive down margins. If somehow stores were selling generators for 10x, you'd have a thousand guys with U-Hauls all driving down to Florida and quickly driving the price down to 2x. The preparation would even start well ahead of time. In the absence of a price cap, opportunistic suppliers would begin preparing their supply lines as soon as news of an impending storm arrived. Rather than flee in the event of a disaster, suppliers would flood the region with goods. The higher the potential margins, the more likely this is to happen which limits these very margins.
On the demand side, savvy forward-looking customers would make purchases well in advance because they'd be incentivized to save money and not pay 2-3x during a hurricane, which would decrease demand during the hurricane. With prices being higher than normal very few would buy more than they needed, which would dramatically decrease demand everywhere.
With these effects on supply and demand from proper price discovery, prices would end up higher on average than a pre-hurricane equilibrium, but more like 1.5-2x rather than 10x, and there would be better allocation of resources--more people getting the minimum they need and far less hoarding.
Quote:
Originally Posted by de captain
Prices shouldn't be allowed to increase during a crisis based solely on demand. Examples of people being outraged over price gouging all have to do with stores marking existing inventory up by outrageous prices based solely on the quantity available on hand.
All?
http://www.foxnews.com/travel/2017/0...nd-drinks.html
People were outraged Disney was charging regular and even discounted prices. Lots of people who don't understand business or economics are outraged all the time.
Quote:
Originally Posted by de captain
Very few people get outraged over the rising price of commodities when the cost of supplying those commodities goes up. Everyone gets outraged over being ****ed in the ass in their time of need though.
Is "****ed in the ass" the thread's new working definition of price gouging? It doesn't seem very technical.