by Countable | Updated on 10.10.18
“actually making matters worse by shutting down the mechanism - rising prices - that efficiently and effectively dispatches knowledge and information around the world and calls desperately-needed resources to the areas that are likely to be most affected by the storm.”
"Doubling the price will make customers think twice about buying another gallon of milk, for example, thus leaving supply for those who didn’t arrive at dawn," Mohammed wrote.
Is price gouging “unconscionable”? Or is it the free market at work? Should states relax their price-gouging laws? Hurricane Michael is making landfall: take action above and tell your reps what to do, then comment below.
(Photo Credit: iStockphoto.com / hsun337)
Written by Countable
Price gouging ensures that one customer won’t buy all of a given supply. Let’s say a 24 pack of water usually goes for $4 by me. If the hurricane comes here and I have $100, I may go ahead and buy the last 10 cases even though I may not need it. Now if those cases were $30 each, I can’t afford to buy all, nor would I want to spend $300 on all the water.
It’s already against the law but it happens every time everywhere. It simmers down after local law enforcement cracks down — takes about a week or two and the water needs to go down. Generators, Chain Saws, fuel of any sort, and plastic sheeting are generally most in demand — along with industrial fans to dry things out and mitigate mold — enerally the larger stores the Walmart’s and National hardware chains are generally decent. Also, as soon as the water is down goods flow back into the area quickly depending upon the level of damage to infrastructure.
The first rule of economics is that all goods and services are scarce. That is much more the case when there are disasters that disrupt normal supply chains. Scarce goods require rationing, which can happen one of two ways - voluntary rationing (prices adjust and consumers in the market self-limit by reducing consumption, which itself then provides a natural downward pressure on prices, to counteract the upward pressure from reduced supply), or involuntary rationing (someone from the government arbitrarily decides what sounds like a "fair" amount for everyone to get). I choose "price gouging" over government oversight, and would choose that every single time. Additionally, the higher prices (and hence the higher profit opportunities) provide incentive for suppliers outside the affected area to undertake the expense of figuring out how to get goods in there and make sales, thereby increasing the supply available to those affected by the disaster (and, of course, that drives prices back down as well). At this point anyone against the natural movements of prices is basically against helping people.
No ... Prices should not increase due to a disaster since people will be in need. However to prevent one person from clearing out the inventory it should be rationed so everyone has equal opportunity to purchase necessary commodities. This should only be implemented on food and water commodities, the nice to haves like TVs, tobacco, wine, etc should be exempt from this protection. As they are necessities for survival.