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Started By
Message
re: "Price Gouging" during a disaster: Good or Bad
Posted on 9/1/17 at 8:51 pm to LSUtigerME
Posted on 9/1/17 at 8:51 pm to LSUtigerME
LSU
I get your point but that's not how the network works.
I get your point but that's not how the network works.
0
Posted on 9/1/17 at 8:54 pm to TheArrogantCorndog
quote:
How can it do that if you're shrinking the customer base due to overpricing???
Not a lot of people can afford a new Bugatti.... a hell of a lot more people can afford a used 98 civic
Not a lot of people can afford a case of water at $100
A lot more people can afford a case of water at $15
Set quotas per customer based on stock and at regular price... business still makes their money, and more people can have access to critical goods
I'm pro-market and love capitalism, but in a major crisis, be respectful of those in need
This is a great answer
Posted on 9/1/17 at 8:54 pm to LSUtigerME
quote:
What good is the commodity if the people it's intended to be "reserved" for can no longer afford it?
There's other ways to restrict distribution without putting the burden ON THE VICTIMS.
If you want to reward/incentivize additional supply chains, do not use the victims as that source. That's where the whole disaster scenario comes into play.
Those store owners are victims too. How much product are they to lose because of the storm? All frozen foods, refrigerator goods, etc?
How are they supposed to compensate for their losses? They can't go to their boss and ask for help, they have to make do themselves.
Posted on 9/1/17 at 8:56 pm to magildachunks
Are they not insured for their contents?
Posted on 9/1/17 at 8:56 pm to magildachunks
quote:
Explain how if I have Entergy, demco will be able to charge me with higher price spikes.
They won't. But you also won't have power. Just like those gas stations that do not have fuel, also can't charge you a premium.
Wouldn't that sure as hell motivate Demco to restore power as fast as possible? Want to get in on these profits right? Channeling in other supply chains. Those hotels and gas stations and stores with power, worth it to pay the premium and pass that buck to the customer?
Yes, utilities are regulated distribution, but it's the same principle. It all ties into the same grid. Those with it, pay a premium to get it. Regardless of which company supplies it to you. They all charge a premium for power supplied during a period of X-Y.
Posted on 9/1/17 at 8:57 pm to magildachunks
quote:
But that's not what most are arguing. They're saying it's immoral and should definitely be illegal.
It is immoral, but it shouldn't be illegal.
Posted on 9/1/17 at 8:58 pm to 50_Tiger
quote:
Are they not insured for their contents?
Does it matter?
Posted on 9/1/17 at 9:00 pm to magildachunks
Yes because it makes your point on that moot. They are getting paid for it regardless lol.
Posted on 9/1/17 at 9:01 pm to EA6B
quote:
So once again is it better to pay a higher price for a commodity and have it available or have a shortage?
But again, that's not how it works in a disaster situation such as this.
Whether corner stores charge $5/case or $100/case of water, they're going to get resupplied in the same amount of time. As soon as people can get water and fuel to Houston, it will be there. Price gouging isn't going to speed that up.
Posted on 9/1/17 at 9:05 pm to 50_Tiger
quote:
Yes because it makes your point on that moot. They are getting paid for it regardless lol.
What if they aren't?
Posted on 9/1/17 at 9:06 pm to slackster
quote:
Whether corner stores charge $5/case or $100/case of water, they're going to get resupplied in the same amount of time. As soon as people can get water and fuel to Houston, it will be there. Price gouging isn't going to speed that up.
But it extends the current supply.
Posted on 9/1/17 at 9:14 pm to magildachunks
quote:
But it extends the current supply.
But it doesn't. The argument that they go to those who need them most is flawed. They go to those who need them AND have the means to pay, often in cash.
Additionally, you're unlikely to clear out your supply of water @ $30+ per case, much less $99. Is it helping anyone if it sits there through the entire disaster?
Rationing is a far more effective way to get through the very short term shortage.
ETA - It is worth mentioning again that I fully comprehend all of the textbook free market theory that supports price gouging. I simply contend those arguments fail in the event of a disaster in the real world.
This post was edited on 9/1/17 at 9:16 pm
Posted on 9/1/17 at 9:15 pm to slackster
The ONLY argument in favor of price gouging is the reduction in "hoarding" of supplies and ensuring the supply remains sufficient to meet demand. The accomplishes two things, it limits the extraneous purchases (demand) and encourages other supply chains to capitalize on that profit (supply).
I do not disagree that it accomplishes this. However, it's costly to those who need it most. It puts additional unnecessary strain on the victims who need the supplies the most. And in extreme cases, actually reduces their ability to consume this product. This can place unwarranted additional strain on other services, such as rescue, shelters, distribution centers, etc.
You can also restrict the demand by imposing a restriction on quantity of purchases. This ensures a sufficient supply is available, and also ensures that supply is consumable by all. It does not encourage alternative supply sources as competitively since there is not a premium profit to be made, but there is still free market demand to resupply this area. This can be offset by other influences (government incentives, private distribution, etc.). This is counter to the "free market" principle, but this is a declared disaster area. This warrants a short term restriction on the function of the market, offset by various incentives or enforcement as required. The same reason trading is halted during a terrorist attack, banks are closed, etc.
I do not disagree that it accomplishes this. However, it's costly to those who need it most. It puts additional unnecessary strain on the victims who need the supplies the most. And in extreme cases, actually reduces their ability to consume this product. This can place unwarranted additional strain on other services, such as rescue, shelters, distribution centers, etc.
You can also restrict the demand by imposing a restriction on quantity of purchases. This ensures a sufficient supply is available, and also ensures that supply is consumable by all. It does not encourage alternative supply sources as competitively since there is not a premium profit to be made, but there is still free market demand to resupply this area. This can be offset by other influences (government incentives, private distribution, etc.). This is counter to the "free market" principle, but this is a declared disaster area. This warrants a short term restriction on the function of the market, offset by various incentives or enforcement as required. The same reason trading is halted during a terrorist attack, banks are closed, etc.
This post was edited on 9/1/17 at 9:18 pm
Posted on 9/1/17 at 9:23 pm to slackster
quote:
ETA - It is worth mentioning again that I fully comprehend all of the textbook free market theory that supports price gouging. I simply contend those arguments fail in the event of a disaster in the real world.
To add, the economic argument for price gouging makes much more sense for labor costs post disaster, for example. It isn't a necessity, and the labor market supply will grow rapidly to meet the demand.
That's a different animal than water.
Posted on 9/1/17 at 9:25 pm to LSUtigerME
Pick a Sonic.
This post was edited on 9/2/17 at 3:10 pm
Posted on 9/1/17 at 9:31 pm to Scoop
Supply vs demand
VS
Price gouging
Interesting debate.
Depends what side you are on.
VS
Price gouging
Interesting debate.
Depends what side you are on.
Posted on 9/1/17 at 9:45 pm to slackster
I think that is the key here the argument that the text book doesn't work in real life situations. Too many are making this a black and white issue when it's the grey area. Economics works in a bubble, some of its basis doesn't t work 100% of the time and it does have flaws. I'm as free market as it rationale gets but in a disaster some prices should be raised and some limits in place.
Posted on 9/1/17 at 9:50 pm to Scoop
If the prices were more reasonable that the prices that we have seen in this cases then it would make sense, but they can also set limits. Each person would only be allowed to buy x amount of gallons per purchase or something like that.
Posted on 9/2/17 at 12:01 am to OweO
Water is an outlier and we haven't had a situation where price gouging has really occurred in many years. Yes the media likes to show a Best Buy where prices were jacked up for a case of water, but st the same time there was vehicle access and likely plenty of water in that location. Media wants clicks and that is an easy way to get a social media storm.
Challenge: find the last disaster that had a death caused by dehydration. It simply hasn't happened.
Challenge: find the last disaster that had a death caused by dehydration. It simply hasn't happened.
Posted on 9/2/17 at 12:13 am to 50_Tiger
quote:
Did you not see the 10 dollar gas station picture Restomod posted in the other thread?
The price wasn't high enough them.
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