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  1. #1
    Master

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    Price Gouging. Efficient Allocation Or Unconscionable???

    We have had a couple of different threads that have had some discussion on price gouging. Dealers selling guns at market value above MSRP were called unethical and worse.

    Markets Work! The absolutely best way to allocate a scarce resource is through the market. Walter Williams is the best at explaining how and why this works out for the best of all parties. Indiana has a gasoline price gouging law that applies when the governor declares an emergency. Williams explains why this sounds good but actually fails to make the situation better.

    What I think would make gas available to those who really need it are rising prices. Suppose the pre-hurricane price of gas was $2.60 a gallon. As the hurricane approaches, dealers could let the price rise to $4 a gallon. That would give families who have enough gas to evacuate incentive to voluntarily forgo purchasing gasoline. Their voluntary decision would make more gas available for people who desperately need it. By the way, gas available at $4 a gallon seems more preferable than gas stations shut down because they have sold out of gas at $2.60 a gallon.


    You might reluctantly agree that allowing prices to rise during a natural disaster helps allocate resources, but that's not the intention of sellers who raise prices. They are in it for windfall profit. I say: So what? It's what their actions accomplish that's important ó namely, getting people to conserve during a natural disaster. Also, higher prices create incentives for suppliers of all kinds of goods ó such as plywood, bottled water, generators and repair services ó to pitch in to help to restore people's lives.
    Suppose a New Jersey motel room rented for $125 a night prior to Hurricane Sandyís devastation. When the hurricane hits, a husband, wife and their two youngsters might seek the comfort of renting two adjoining rooms. However, when they arrive at the motel, they find that rooms now rent for $250. At that price, they might decide to make do with one room. In my book, that would be wonderful. That decision would make a room available for another family who had to evacuate Sandyís wrath.

    New Jersey Gov. Chris Christie and others condemn this as price gouging, but I ask you: Which is preferable for a family seeking shelter ó a room available at $250 or a room unavailable at the pre-hurricane price of $125? Itís not the intention of the motel owner to make a room available for another family. He just sees an opportunity to earn more money. It was not the intention of the family of four who made do with just one room to make a room available for another evacuating family. They are just trying to save money.


    These principles hold in everyday markets as well. I thought during the ammo shortage that dealers were not charging much as the ammo was worth. Did that help or hurt shooters that wanted ammo? By dealers selling at lower than market value others learned delivery schedules, bought up ammo, to resell at market value online and through classifieds. Did that help the guy that wants 500 rounds for his kids to shoot. Nope, he couldn't get to the store to beat the resellers, he had to buy from resellers and likely paid more than if the dealer had priced it at market value and it certainly was not as convenient.

    Same goes for guns themselves, I get it, the Python is a classic name many never thought they might even be able to own. How should the dealer allocate the Python to the number of buyers wanting it'?

    Lots of reading with great examples of how this all works..

    https://www.creators.com/read/walter...tural-disaster

    Price gouging ? Walter E. Williams

    https://www.richmond.com/opinion/col...d1572789a.html

    https://fee.org/articles/texas-price...ricane-heroes/

  2. #2
    Grandmaster BehindBlueI's's Avatar

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    Are we going to pretend there's no difference between commodities, luxuries, and necessities?

    What happens if you both limit price and limit purchases?

    Say, gas is $2.80 but 10 gallons is all you can buy. Enough to evac, not enough to store and resell. Why is that not viable?

    But let's talk specifically about the ammo crunch.

    The model many retailers went to was something like a brick of .22 is still $18 but you can only buy two. Enough for shooters to shoot, not enough incentive for resellers to drive around buying up everyone's stocks. Does it help the shooting community to make ammunition harder to obtain for the masses? Does making the barrier to entry for new shooters higher hurt everyone's 2nd amendment rights long term? Well...duh. Screw the gougers, retailers or resellers both. They were working against you and your rights long term. If a new football was $500, do you think the number of football players might decline? The number of people interested in football might decline? The long term health of football as a sport would decline? Then why is shooting any different? Do you really think that the number of people who care about shooting doesn't affect the strength of the 2nd amendment?

    Oh, you say, but you should have already stockpiled someone will say. Sure. If you're an old hand. We do want new people to become shooters, though, right? How exactly are they supposed to have a stockpile? Do you have a stockpile of parts for the car you might buy five years from now? Wow, what a lack of foresight on your part.



    What happens when not everyone buys into the BS that price gouging is good and the market reacts after the disaster is over? Does it makes sense to get a windfall profit today if you lose customers long term?
    L'otters are not afraid.

  3. #3
    Grandmaster HoughMade's Avatar

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    Quote Originally Posted by BehindBlueI's View Post
    ...What happens when not everyone buys into the BS that price gouging is good and the market reacts after the disaster is over? Does it makes sense to get a windfall profit today if you lose customers long term?
    That's what we would call "market forces".
    ​Bullies suck. They also make you stronger.

  4. #4
    Master

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    Quote Originally Posted by BehindBlueI's View Post
    .
    What happens when not everyone buys into the BS that price gouging is good and the market reacts after the disaster is over? Does it makes sense to get a windfall profit today if you lose customers long term?
    If dealers always sell for the market value all other parties must behave in accordance with the market, they have no other choice. Buyers can buy what they need at market price or choose not too.

    If the dealer sells below market price then buyers often get no choice as resellers and hoarders buy up supply and there is nothing on the shelf. By selling at market price resellers and hoarders are priced out and the product is available to the public.

    There is no known system to stop resellers and hoarders.

    Is no .22 ammo on the shelf at $9 and plenty on Craigslist at $20 preferable to plenty on the shelf at $13-$17 at the dealer. What resellers will do for $11 they likely will not for $3-$7...

    Markets really work...

  5. #5
    Plinker

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    Free markets are the absolute best at allocating scarce resources. No other method comes close. Ultimately the customer sets the price, not the seller. It may not appear to be true at first blush, but thatís the reality.

  6. #6
    Grandmaster DoggyDaddy's Avatar

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    Quote Originally Posted by Knight Rider View Post
    Free markets are the absolute best at allocating scarce resources. No other method comes close. Ultimately the customer sets the price, not the seller. It may not appear to be true at first blush, but thatís the reality.
    Which is why, even to this day, you see people at gun shows trying to sell bricks of .22 ammo for 30 or 40 bucks. I hope they choke on it.

  7. #7
    Master

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    Quote Originally Posted by DoggyDaddy View Post
    Which is why, even to this day, you see people at gun shows trying to sell bricks of .22 ammo for 30 or 40 bucks. I hope they choke on it.
    Yep, they missed getting a chair before the music stopped.

  8. #8
    Grandmaster KJQ6945's Avatar

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    Price gouging is a made up liberal term, just like global warming, hate crimes, and common sense gun reform.

    Getting supplies to the people that need them, is how shortages go away, and disasters are overcome. Simple supply and demand.

    Liberal politicians always want to prolong the suffering and make laws against price gouging. The sheep cheer, because they think they are being saved. They are wrong and very short sighted.

  9. #9
    Grandmaster hoosierdoc's Avatar

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    Gas should cost $10/gal when hurricane hits. It stopd hoarding and ensures supply

    Same with hotel rooms for evacuees
    Amazing Grace, how sweet was her sound.

    Love them as if you'll lose them.

  10. #10
    Grandmaster KJQ6945's Avatar

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    Quote Originally Posted by hoosierdoc View Post
    Gas should cost $10/gal when hurricane hits. It stopd hoarding and ensures supply

    Same with hotel rooms for evacuees
    As the demand increases, so does the price. Unless you let a Democrat in charge. Then, you end up with no supply, due to laws that say the price of an item canít be higher than the price before the disaster. Ask people in new jersey.


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