Economics: The Value of "Price Gouging"

[Speaker to Animals]

So nobody can respond to the simple fact that price gouging results in the opposite of efficient distribution of resources and, in fact, often results in a surplus of goods that deliberately do not get distributed because it maximizes profit when you corner supply.

LOL

I can respond to that - your assertions are unproven, while the law of supply/demand is well founded. A sudden increase in demand upon an unchanged supply drives prices higher. That’s normal, yet many people label this absolutely predictable price reaction as “gouging”.

State sponsored efforts to control or influence the law of supply/demand introduce economic inefficiencies and lead to worse outcomes than simply allowing supply/demand to guide price points.

I just explained to you how it works. This happens whenever somebody corners a market, not just in emergencies.

Put down the Sowell book and go retake macroeconomics, dude. Seriously. This is getting pathetic.

[Speaker to Animals]

Let's at least attempt to address this honestly and charitably.

(1) Do you accept the assertion that one cannot actually price gouge unless they achieve a temporary corner on the market for a given good, or a small group of people collectively corner that market and collectively decide to engage in price gouging?

[K@th]

I guess it's the exploitation of the poor guys who have no choice because they can't get home because of the bad weather that is pissing me off.
I'm in the same situation myself tonight except my room is free.

I once spent two hours driving home in the snow (20 minute drive,) and spent another two hours shoveling the driveway so my parents could get the van up the driveway (steep.)

As soon as I got in the house to get warm, my parents called to tell me that had stopped for the night at a hotel; one I could, in no way, afford.

I had four hours of hell while my 'rents enjoyed a nice evening with room service. Life sucks sometimes, but we play the hand we are dealt. Moral of the story; I lived to tell the tale.

There will never be enough of X to cover everybody. Even if the hotel rooms were $1 each, there are still some people who are going to have to sludge through the muck to get elsewhere, because the supply is LIMITED.

[DBTrek]

I guess it's the exploitation of the poor guys who have no choice because they can't get home because of the bad weather that is pissing me off.
I'm in the same situation myself tonight except my room is free.

Well, look at it this way - more people want rooms then there are rooms available. That’s the reality. There are several ways you can address that problem, free market pricing, central planning, forced rationing, first come first serve, according to Age, according to height, -whatever.

But no matter how you choose to address it, some people aren’t getting rooms. So it’s fine to be mad at the market pricing solution for leaving some people out in the cold - just realize all alternatives also leave people out in the cold.

I happen to think the market pricing solution reaps the most benefits for everyone involved, but we may yet innovate even better systems. I just don’t think we have better answers to the problem today.

[Fife]

I just explained to you how it works. This happens whenever somebody corners a market, not just in emergencies.

Put down the Sowell book and go retake macroeconomics, dude. Seriously. This is getting pathetic.

Point of order, please on one of your terms of art. What does "corners the market" mean in the context of disasters/gouging/anything in particular, and how is it relevant to our discussion? Just a simple definition is all I'm asking for.

[DBTrek]

Let's at least attempt to address this honestly and charitably.

(1) Do you accept the assertion that one cannot actually price gouge unless they achieve a temporary corner on the market for a given good, or a small group of people collectively corner that market and collectively decide to engage in price gouging?

I think demand has to be part of the equation. If demand is vastly outstripping supply it doesn’t matter if people have a market cornered or not. Lower priced goods will move first, higher priced, last - but you can still charge the higher prices (aka gouge) even if there are lower priced competitors. Those competitors can’t satisfy all the demand.

[Montegriffo]

I guess it's the exploitation of the poor guys who have no choice because they can't get home because of the bad weather that is pissing me off.
I'm in the same situation myself tonight except my room is free.

Well, look at it this way - more people want rooms then there are rooms available. That’s the reality. There are several ways you can address that problem, free market pricing, central planning, forced rationing, first come first serve, according to Age, according to height, -whatever.

But no matter how you choose to address it, some people aren’t getting rooms. So it’s fine to be mad at the market pricing solution for leaving some people out in the cold - just realize all alternatives also leave people out in the cold.

I happen to think the market pricing solution reaps the most benefits for everyone involved, but we may yet innovate even better systems. I just don’t think we have better answers to the problem today.

I get that there may be a shortage of rooms I just don't see how raising the price of a room helps that problem.
If it were my hotel I would let people know that they will have to share a twin room and that nobody gets to have a room to themselves once all the single rooms have gone. If you aren't prepared to share a room then you are welcome to try elsewhere.

No need to be greedy and charge extra for a bed just because people have no choice.
The farmer who pulled my car out of a snow drift today didn't ask for money before he helped me out. He just did it because he could and it was the kind thing to do. Maybe you think he was a sucker for not screwing me out of 20 quid because supply and demand or something.

[Speaker to Animals]

Let's at least attempt to address this honestly and charitably.

(1) Do you accept the assertion that one cannot actually price gouge unless they achieve a temporary corner on the market for a given good, or a small group of people collectively corner that market and collectively decide to engage in price gouging?

I think demand has to be part of the equation. If demand is vastly outstripping supply it doesn’t matter if people have a market cornered or not. Lower priced goods will move first, higher priced, last - but you can still charge the higher prices (aka gouge) even if there are lower priced competitors. Those competitors can’t satisfy all the demand.

Demand is mostly irrelevant other than your needing some demand (demand for Barbie dolls won't be high in a disaster, for example).

The only thing that matters in this discussion is whether sellers retain the advantage of a cornered supply. A disaster could strike Houston, which sits on a huge supply of gasoline on any given day, but as long as the sellers can keep the supply locked away from the market, they can theoretically engage in price gouging.

If you do not have supply cornered, then your price gouging attempt will be fruitless, since people will simply buy from sellers who choose not to collude in your price gouging scheme. This is self-evident.

We cannot really agree on a damned thing if you refuse to agree to this most basic principle in economics. This is the basis for oligopolies, cartels, and monopolies. It's literally macroeconomics 101.

[Fife]

Let's at least attempt to address this honestly and charitably.

(1) Do you accept the assertion that one cannot actually price gouge unless they achieve a temporary corner on the market for a given good, or a small group of people collectively corner that market and collectively decide to engage in price gouging?

I think demand has to be part of the equation. If demand is vastly outstripping supply it doesn’t matter if people have a market cornered or not. Lower priced goods will move first, higher priced, last - but you can still charge the higher prices (aka gouge) even if there are lower priced competitors. Those competitors can’t satisfy all the demand.

As long as the Walmart exists, nobody is going to have supply "cornered," or whatever, for long at all.

Prices are signals. Organic, true, free prices are signals that tell human beings what to get shipped where.

Prices aren't static, except with the dipshits on capital hill freeze them artificially. When that happens, people in need suffer. Not rocket science; just contra to the feelz upon on Big Rock Candy Mountain, I guess. /shrug

[Fife]

If it were my hotel I would let people know that they will have to share a twin room and that nobody gets to have a room to themselves once all the single rooms have gone. If you aren't prepared to share a room then you are welcome to try elsewhere.

Well, you are adjusting your price per bed to meet demand in that event.

You mean old gouger.