Price "gouging"

ZRH

(retired?) Google-F.U.
Mar 5, 2005
26,477
1,939
673
<3
Marklar
₥20,416
I'm sure you are aware of the accusations of price gouging in wake of natural or otherwise diasters. Is it right for the sellers of such goods to, in keeping with the law of supply and demand, price them where availability coincides with supply and price?

Should the government, and by extension the law, force them to fix the prices?

I'll read this when I get up.
 
While I understand that a sucessfull business will, just like you said, price themselves based on the market laws of supply and demand, I feel that a natural disaster is one case where government regulation is necessary. If everything is left to the invisible hand of the economy corporations will exploit people when they need the most help. This leaves a population who needs extra support from society and the government to get their lives on track and survive.
 
That's all fine and good, but where do you draw the line-- and, more importantly, who gets to draw it. No matter what kind of rules you put in place you'll get people complaining about the government trampling on the rights of business or ignoring the needs of the helpless.
 
Essentials should never comply to the laws of supply and demand, especially in a natural disaster. That being said, if they don't price based on supply and demand during these events, it'll be a first come, first server, with the first come folks hoarding all the essentials and reselling them for a profit.
 
mattcohn.com said:
While I understand that a sucessfull business will, just like you said, price themselves based on the market laws of supply and demand, I feel that a natural disaster is one case where government regulation is necessary. If everything is left to the invisible hand of the economy corporations will exploit people when they need the most help. This leaves a population who needs extra support from society and the government to get their lives on track and survive.
Would you say that fixing the prices serves to only let the first people who can get to the 'goods' get them? Fixing them creates an unnatural low spot in a market where people are suddenly willing to pay more for goods simply because of their scarcity. If they were bought at the prices decided by the laws of free markets the amount of demand would make resupplying those goods [from outside the area] an attractive course of action.

With heavy handed government sanctions there would be zero profit to make the ostensibly risky proposition of resupply attractive.
 
FlamingGlory said:
Would you say that fixing the prices serves to only let the first people who can get to the 'goods' get them? Fixing them creates an unnatural low spot in a market where people are suddenly willing to pay more for goods simply because of their scarcity. If they were bought at the prices decided by the laws of free markets the amount of demand would make resupplying those goods [from outside the area] an attractive course of action.

With heavy handed government sanctions there would be zero profit to make the ostensibly risky proposition of resupply attractive.
see my post above yours, the suppliers are just cutting out the middle man by gouging
 
tre said:
see my post above yours, the suppliers are just cutting out the middle man by gouging
I didnt see it, after the first three people agreed with matt I just replied to him...

In that case. These people who buy everything cheap and resell them: They are going to be screwed in a pure capitalist model because the increased demand creating an inrush of 'goods'. Theyd be forced to price competitively if they wanted to unload anything.
 
FlamingGlory said:
Would you say that fixing the prices serves to only let the first people who can get to the 'goods' get them? Fixing them creates an unnatural low spot in a market where people are suddenly willing to pay more for goods simply because of their scarcity. If they were bought at the prices decided by the laws of free markets the amount of demand would make resupplying those goods [from outside the area] an attractive course of action.

With heavy handed government sanctions there would be zero profit to make the ostensibly risky proposition of resupply attractive.
I disagree that there would be zero profit or incentive to order more supplies. If something being sold at fair market value didn't generate a profit in the first place, I guarantee either that product won't be sold for very much longer or fair market value will go up. I'm not saying that corporations should be forced to cut their own hands off to help the needy, I'm saying they should be prevented from raising their prices above fair market value in the extreme casses of an emergency.

In the city of SeaTac (short for Seattle Tacoma, a small city sitting in between Seattle and Tacoma just big enough to cover SeaTac airport) it is a law that retailers must charge the same fair-market price their other outlets in other areas charge. The result? A combo meal in the airport will cost you $5, the same as it would anywhere else, instead of $9. What I'm suggesting here is much more restrained than that, I'm saying that only in an emergency situation should businesses be prevented from exploiting the public by the government.

And to b_sinning, thanks :) It's my first time on here in about a month since I just got back from my vacation to California, I thought I should be extra helpful.
 
mattcohn.com said:
I disagree that there would be zero profit or incentive to order more supplies. If something being sold at fair market value didn't generate a profit in the first place, I guarantee either that product won't be sold for very much longer or fair market value will go up. I'm not saying that corporations should be forced to cut their own hands off to help the needy, I'm saying they should be prevented from raising their prices above fair market value in the extreme casses of an emergency.

In the city of SeaTac (short for Seattle Tacoma, a small city sitting in between Seattle and Tacoma just big enough to cover SeaTac airport) it is a law that retailers must charge the same fair-market price their other outlets in other areas charge. The result? A combo meal in the airport will cost you $5, the same as it would anywhere else, instead of $9. What I'm suggesting here is much more restrained than that, I'm saying that only in an emergency situation should businesses be prevented from exploiting the public by the government.
Fair market value is a real property/tax concept in my mind, i.e. "[f]air market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts" 26 CFR 20.2031-1. It isnt readily applicable to goods and services in a free market. It's hard to ignore the fact that compulsion plays a major role in the everyday exercise of a free market, fair market value would be far less than even 'retail' price.

I never did say that there would be "zero incentive" to resupply affected markets; it is my opinion that the incentive for resupply would be the same as for all other markets, therefore a marked increase in price would create a greater demand for resupply as is needed. There would also be an incentive for the actual sellers of such goods to remain during the disaster vis a vis pulling out.

Your SeaTac example (which I think is a marvelous idea, because I paid 5 pound for a sandwich once) is more akin to a contuing local monopoly. No amount of resupply is going to change demand and sellers are not going to underbid each other because they know that it wouldnt change demand.
 
I'm going to start selling man seed on ebay and then gough up the price when the authorities come for me.
 
ChikkenNoodul said:
Boston has the same requirement at Logan airport re: the food prices, but go 15 miles out of the city in the other direction on the Mass Pike and you'll pay a heck of a lot more for fast food at the rest stop than off the highway :fly:

Yeah but the real estate probably costs them a lot more at a rest stop than it does off the highway, so the profit margin is probably similar.
 
ChikkenNoodul said:
Seeing as the property is owned by the state, and no doubt leased for relatively cheap money, AND the sales volume is staggering - I'm guessing the business owner is wearing 18lbs of gold on their person.
They're black?