Economics: The Value of "Price Gouging"

[DBTrek]

If hotels, water bottle sellers, flashlight merchants, etc, defy the laws of the market and charge more than demand will bear - who loses?

Everybody.

It’s possible that people will ask too much for a good/service during a crisis - and the result is it won’t sell. The common reaction to this is to lower price until price meets demand. But if some people prefer to eat the costs of their investment in hopes of obtaining a price the market will never bear, that’s their loss. Literally.

[Fife]

The problem is that quaint little narrative in defense of price gouging is not really what happens in most cases. Price gouging usually results in excess supply not getting sold because it's cheaper to hord a large supply and sell off a small fraction at jacked prices.

Think of the diamond market. That's an example of a good that actually is not terribly rare, but the supply is cornered, so the suppliers sell off only small amounts of their vast reserves at very high prices.

edit: and your entire half-assed defense of gouging was based around a bullshit anecdote. Get real.

Fuck yeah, man. Diamonds are tasty in the event of hurricane or earthquake.

I like Diamond chimichangas, myself. What about you, you a diamond chimichanga man?

[SuburbanFarmer]

If hotels, water bottle sellers, flashlight merchants, etc, defy the laws of the market and charge more than demand will bear - who loses?

Everybody.

It’s possible that people will ask too much for a good/service during a crisis - and the result is it won’t sell. The common reaction to this is to lower price until price meets demand. But if some people prefer to eat the costs of their investment in hopes of obtaining a price the market will never bear, that’s their loss. Literally.

Well, my kids died of dysentary, and we had to eat the dog, but goddammit - at least that 7-11 asshole lost a couple of bucks.

[DBTrek]

It’s 7-11’s fault that you ate your dog, no doubt.
Personal responsibility is literally slavery - the thread, part II.

[Fife]

Where's the "Gibs Alert" gif?

.... looking

[Speaker to Animals]

The problem is that quaint little narrative in defense of price gouging is not really what happens in most cases. Price gouging usually results in excess supply not getting sold because it's cheaper to hord a large supply and sell off a small fraction at jacked prices.

Think of the diamond market. That's an example of a good that actually is not terribly rare, but the supply is cornered, so the suppliers sell off only small amounts of their vast reserves at very high prices.

edit: and your entire half-assed defense of gouging was based around a bullshit anecdote. Get real.

Fuck yeah, man. Diamonds are tasty in the event of hurricane or earthquake.

I like Diamond chimichangas, myself. What about you, you a diamond chimichanga man?

You are flailing and cannot even respond to a simple fact in economics: if you maintain a relative corner on supply, it's more profitable to charge a very high price to those who can afford it while sitting on a reserve you know you will never sell.

Diamonds are an example of a market where supply is relatively permanently cornered for the foreseeable future, and which a fraction of supply is sold at very high prices while the reserves are kept off the market. In the aftermath of a disaster, there exists a short-term condition where sellers who have critical supplies collectively have cornered that market until relief kicks in and transportation resumes. It's more profitable for them to pursue the least efficient allocation of resources possible: price gouging.

Price gouging is not just raising prices commensurate with demand. It's like Titanic lifeboat seating: only the wealthiest get a seat and there are lots of empty seats.

Again: if you have lots of water, and you sold out in a disaster, you did not maximize profit. That's a big problem to your bullshit narrative.

[DBTrek]

The diamond allegory is good - from a supply side argument.

But then, price fixing is the economic activity that forces artificial shortages or surpluses. In order to pull off price fixing you need to control the entire supply, collude with all entities that own the supply, or be a government.

A single hotel can’t price fix a market by themselves. If other hotels don’t buy in to the $1000 room scheme then they will fill up with tenants first. If the gouger is the last holdout, and therefore the only remaining supply - and he is a bad actor, then the problem is you have one bad hotel owner.
The problem isn’t that scarcity results in demand driving prices higher.

[Fife]

The problem is that quaint little narrative in defense of price gouging is not really what happens in most cases. Price gouging usually results in excess supply not getting sold because it's cheaper to hord a large supply and sell off a small fraction at jacked prices.

Think of the diamond market. That's an example of a good that actually is not terribly rare, but the supply is cornered, so the suppliers sell off only small amounts of their vast reserves at very high prices.

edit: and your entire half-assed defense of gouging was based around a bullshit anecdote. Get real.

Fuck yeah, man. Diamonds are tasty in the event of hurricane or earthquake.

I like Diamond chimichangas, myself. What about you, you a diamond chimichanga man?

You are flailing and cannot even respond to a simple fact in economics: if you maintain a relative corner on supply, it's more profitable to charge a very high price to those who can afford it while sitting on a reserve you know you will never sell.

Diamonds are an example of a market where supply is relatively permanently cornered for the foreseeable future, and which a fraction of supply is sold at very high prices while the reserves are kept off the market. In the aftermath of a disaster, there exists a short-term condition where sellers who have critical supplies collectively have cornered that market until relief kicks in and transportation resumes. It's more profitable for them to pursue the least efficient allocation of resources possible: price gouging.

Price gouging is not just raising prices commensurate with demand. It's like Titanic lifeboat seating: only the wealthiest get a seat and there are lots of empty seats.

Again: if you have lots of water, and you sold out in a disaster, you did not maximize profit. That's a big problem to your bullshit narrative.

Well, I'm going to have to go the DB route here.

If you're going to babble about a bunch of a posteriori sermonizing, I'll have to see the chapter and verse on your "facts." Where are all those empty $1,000 hotel rooms littered through our disaster history? Where is all the unconsumed clean drinking water?

[SuburbanFarmer]

Fuck yeah, man. Diamonds are tasty in the event of hurricane or earthquake.

I like Diamond chimichangas, myself. What about you, you a diamond chimichanga man?

You are flailing and cannot even respond to a simple fact in economics: if you maintain a relative corner on supply, it's more profitable to charge a very high price to those who can afford it while sitting on a reserve you know you will never sell.

Diamonds are an example of a market where supply is relatively permanently cornered for the foreseeable future, and which a fraction of supply is sold at very high prices while the reserves are kept off the market. In the aftermath of a disaster, there exists a short-term condition where sellers who have critical supplies collectively have cornered that market until relief kicks in and transportation resumes. It's more profitable for them to pursue the least efficient allocation of resources possible: price gouging.

Price gouging is not just raising prices commensurate with demand. It's like Titanic lifeboat seating: only the wealthiest get a seat and there are lots of empty seats.

Again: if you have lots of water, and you sold out in a disaster, you did not maximize profit. That's a big problem to your bullshit narrative.

Well, I'm going to have to go the DB route here.

If you're going to babble about a bunch of a posteriori sermonizing, I'll have to see the chapter and verse on your "facts." Where are all those empty $1,000 hotel rooms littered through our disaster history? Where is all the unconsumed clean drinking water?

Don't have time to dig through 25 year old local newspaper articles, but it's true. You have to be there, I guess.

The only reporters doing anything in a disaster are reporting on the disaster. Whens the last time you saw a story about starving Venezuelans or Puerto Ricans without power? It's still there, but the media has moved on. The locals have to deal with it on their own.

[K@th]

Don't have time to dig through 25 year old local newspaper articles, but it's true. You have to be there, I guess.

Here's one article about it. Some people had to pay *GASP* $100 for a $40 room due to price gouging. Maybe it's a typo though, and they meant to write $1,000?

https://news.google.com/newspapers?nid= ... 41,4194534