Price gouging is good

[Simpletruther]

Your article doesn't support you. It argues that allowing price gouging is more efficient than banning it because gouging bans produce consumer hoarding. Not the best argument on its face because allowing price gouging just creates a different set of hoarders: the gougers. Because duh, you can't gouge someone unless you've first hoarded what they need.

That has nothing to do with morality. It's an argument about economic efficiency. And since it was made in a paper, its author can only rely on a few anecdotes from history. Readers don't have the training and experience to understand a rigorous economics paper on the point. I would imagine that it's a hell of a lot more complicated than "price controls inefficient vs price controls efficient".




But you? You're trying to argue that it is not immoral to take advantage of the life-threatening situation to rip you off. And that as wrong is as it is disgusting.

Professional gougers would be more efficient hoarders, not waiting till the last second like everyone does during an emergency, thus more supply is available. This should be obvious.

 

[BlueTex]

Professional gougers would be more efficient hoarders, not waiting till the last second like everyone does during an emergency, thus more supply is available. This should be obvious.

Do you disagree with the price controls and rationing imposed by the federal government during WWII?

 

[Simpletruther]

Do you disagree with the price controls and rationing imposed by the federal government during WWII?

Yes.

 

[Linc]

russki repub oil men

 

[Greenbeard]

I didn't make that claim.

Price gouging cannot be eliminated unless you are Russia or north korea.

Hotels charge more on certain weekends, they price gouge. Uber charges more when supply of drivers is low, they price gouge, we could go on forever. Superbowl lickets are higher than a normal game etc etc etc.

But allowing gouging will undoubtedly bring prices down and increase supply, both of which are beneficial to society.

Okay, so let's try again. Is there some empirical evidence that price gouging has led to more hotel rooms on "certain weekends," more seats for SuperBowls, etc?

 

[Simpletruther]

Okay, so let's try again. Is there some empirical evidence that price gouging has led to more hotel rooms on "certain weekends," more seats for SuperBowls, etc?

It should be obvious that a hotel will be more likely available for those who need it more, when the price goes up. I personally and most others like that option.

But for consumables, are you kidding? You need data to show that a higher price will increase supply given some adjustment time?

 

[Greenbeard]

It should be obvious that a hotel will be more likely available for those who need it more, when the price goes up. I personally and most others like that option.

What does "more likely available" mean? You just flatly stated gouging "undoubtedly" increases the supply of hotel rooms and reduces their price, so I'm asking for some empirical backup for that claim.

But for consumables, are you kidding? You data to show that a higher price will increase supply given some adjustment time?

Would love to see the empirical evidence that flashlight prices are lower in the next hurricane following gouging in the prior one, yes. That sounds like a fascinating paper!

 

[Surrealistik]

‘Price Gouging’ After a Disaster Is Good for the Public

If government prohibits suppliers from charging more, consumers hoard, exacerbating shortages.

www.wsj.com

This is an emotional topic. I have myself been judgemental of price gougers.
I know this will never sink in to most, but maybe there are a few here willing to put all bias aside and thing with complete rationality here.

Someone charges 50 bucks for a cheap flashlight during a hurricane and people call him evil. Some of Those same hypocrites would gladly offer 50 bucks if they were stuck in that situation. Then turn around and call the person immoral that complied with his request and sold it. Pathetic.

If we allowed price gouging it would be a net benefit to society. It increases supply, and sometimes when it's life and death, when you really need supply.

Oh but it's easier to not think, but emotionally let people die and feel good about ourselves pointing at that nasty price gouger, how we ran him out of town (then oops a storm hit and people died from lack of product).

As an earlier poster stated, it's not that simple.

The obvious ethical dimension aside of people charging exorbitant amounts for essential goods in a crisis to the point that some might not even be able to afford them, allowing gouging encourages hoarding and panic buying (which decreases supply) to both engage in gouging or to avoid being gouged, and otherwise enhances the adverse impact of irrational, fear and greed motivated actions that are overshoot or are otherwise disconnected from economic realities:

What should we do about price gouging? - Economics Observatory

During the Covid-19 crisis, a number of products have been in short supply.

www.economicsobservatory.com

There are better ways to encourage production that don't involve the spiraling of such socially (and economically) destructive behaviours, including emergency subsidy, mandate, tax credits and investment.

 

[Simpletruther]

What does "more likely available" mean? You just flatly stated gouging "undoubtedly" increases the supply of hotel rooms and reduces their price, so I'm asking for some empirical backup for that claim.



Would love to see the empirical evidence that flashlight prices are lower in the next hurricane following gouging in the prior one, yes. That sounds like a fascinating paper!

Right you want to see data. I have none. You win the debate great.

I am curious though, do you really doubt that someone making extraordinary profits during a hurricane would not create motivation in others to do the same, and increase competition and lower prices?

 

[Simpletruther]

As an earlier poster stated, it's not that simple.

The obvious ethical dimension aside of people charging exorbitant amounts for essential goods in a crisis to the point that some might not even be able to afford them, allowing gouging encourages hoarding and panic buying (which decreases supply) to both engage in gouging or to avoid being gouged, and otherwise enhances the adverse impact of irrational, fear and greed motivated actions that are overshoot or are otherwise disconnected from economic realities:

What should we do about price gouging? - Economics Observatory

During the Covid-19 crisis, a number of products have been in short supply.

www.economicsobservatory.com

There are better ways to encourage production that don't involve the spiraling of such socially (and economically) destructive behaviours, including emergency subsidy, mandate, tax credits and investment.

Allowing gouging does the opposite, it discourages hoarding as most people will only get want they need at the temporary higher prices, instead loading up "just in case".

 

[Greenbeard]

Right you want to see data. I have none. You win the debate great.

I am curious though, do you really doubt that someone making extraordinary profits during a hurricane would not create motivation in others to do the same, and increase competition and lower prices?

I believe very strongly in examining how the world really is and how humans actually behave, not just making shit up and pretending it's true.

Obviously there's some limiting factor to the logic you're trying to use here or gouging would in fact disappear and enough supply would flow in to defeat the gougers. If, as seems clear, you have no idea where that limit lies, I don't see how you can make any claim about these situations whatsoever. Clearly that's an empirical question.

Do price signals remain valid and useful during extreme, catastrophic, or mortal situations? You're arguing 'yes' solely on the basis that they normally work. Not a strong argument. Of course they normally work and normally produce optimal outcomes. The question being asked is whether there are extreme cases in which they don't. For that matter, mixing normal mundane situations (trying to get a hotel room in New England during leaf peeping season or in D.C. when the cherry blossoms bloom, or Uber surge pricing after the game ends) to extreme scenarios (basic necessities or life-saving transportation out of a catastrophe) just isn't valid here.

 

[Simpletruther]

‘Price Gouging’ After a Disaster Is Good for the Public

If government prohibits suppliers from charging more, consumers hoard, exacerbating shortages.

www.wsj.com

This is an emotional topic. I have myself been judgemental of price gougers.
I know this will never sink in to most, but maybe there are a few here willing to put all bias aside and thing with complete rationality here.

Someone charges 50 bucks for a cheap flashlight during a hurricane and people call him evil. Some of Those same hypocrites would gladly offer 50 bucks if they were stuck in that situation. Then turn around and call the person immoral that complied with his request and sold it. Pathetic.

If we allowed price gouging it would be a net benefit to society. It increases supply, and sometimes when it's life and death, when you really need supply.

Oh but it's easier to not think, but emotionally let people die and feel good about ourselves pointing at that nasty price gouger, how we ran him out of town (then oops a storm hit and people died from lack of product).

This site gives a real easy to understand explanation for why gouging is good. After reading this I would like to hear objections. It seems so obviously true.

Gouging laws are like ethanol, it's good politics but it hurts the public.

 

[Surrealistik]

Allowing gouging does the opposite, it discourages hoarding as most people will only get want they need at the temporary higher prices, instead loading up "just in case".

Not necessarily. The mere threat of pending gouging (with buyers knowing of it being a real possibility without intervention or relief), profit opportunities to be had with potential future shortages, or an expected worsening of gouging can actually exasperate hoarding. Remember expectations are huge in economics as any trader or economist who actually knows their stuff will tell you.

 

[Simpletruther]

I believe very strongly in examining how the world really is and how humans actually behave, not just making shit up and pretending it's true.

Me too, that is why I have this position, it's basic economics proven over hundreds of years.

No, gouging wouldn't disappear because the costs of selling, and therefore the cost to the public will be higher in an emergency always.. But the gouged price will undoubtedly be less and supply more if gouging is legally allowed and not demonized.
If a store is allowed to go up on gas can prices during a hurricane, they will undoubtedly stock a few more during hurricane season, and so one and so on. Not only will they stock a few more,. "Joe six pack" will be less likely to buy more gas or gas cans "just in case" during a crisis if he has to pay double normal price. We don't need data to know the sky is blue,. We have seen the blue sky many times.

Obviously there's some limiting factor to the logic you're trying to use here or gouging would in fact disappear and enough supply would flow in to defeat the gougers. If, as seems clear, you have no idea where that limit lies, I don't see how you can make any claim about these situations whatsoever. Clearly that's an empirical question.

Do price signals remain valid and useful during extreme, catastrophic, or mortal situations? You're arguing 'yes' solely on the basis that they normally work. Not a strong argument. Of course they normally work and normally produce optimal outcomes. The question being asked is whether there are extreme cases in which they don't. For that matter, mixing normal mundane situations (trying to get a hotel room in New England during leaf peeping season or in D.C. when the cherry blossoms bloom, or Uber surge pricing after the game ends) to extreme scenarios (basic necessities or life-saving transportation out of a catastrophe) just isn't valid here.

 

[multivita-man]

‘Price Gouging’ After a Disaster Is Good for the Public

If government prohibits suppliers from charging more, consumers hoard, exacerbating shortages.

www.wsj.com

This is an emotional topic. I have myself been judgemental of price gougers.
I know this will never sink in to most, but maybe there are a few here willing to put all bias aside and thing with complete rationality here.

Someone charges 50 bucks for a cheap flashlight during a hurricane and people call him evil. Some of Those same hypocrites would gladly offer 50 bucks if they were stuck in that situation. Then turn around and call the person immoral that complied with his request and sold it. Pathetic.

If we allowed price gouging it would be a net benefit to society. It increases supply, and sometimes when it's life and death, when you really need supply.

Oh but it's easier to not think, but emotionally let people die and feel good about ourselves pointing at that nasty price gouger, how we ran him out of town (then oops a storm hit and people died from lack of product).

Question: does the article define or explain what price gouging really is?

I can understand why prices rise after a storm or a major geopolitical event - that's not gouging. That's supply and demand.

It becomes gouging when the outlet selling the supplies or goods is charging at well beyond what they are paying to obtain those resources and goods, relative to what they were paying before. So hypothetically, if your Exxon or Shell station is marking up the price of gasoline by 10% after a hurricane or geopolitical event, then they're not gouging. They're probably not gouging if they hike it up another few percentage points in the immediate short-term, as petroleum prices are fluid. But if they're charging double or triple the rate? Yeah, that's price gouging, and unless there's a fear of a severe supply shock, there's no justification for it.

It really depends on the circumstances. If the WSJ is defending price increases relative to the increase in the price of commodities, then they're right, but then again, that's not price gouging. If they're defending price 'gouging' in the midst of a commodities panic, again, that's probably not gouging. If they're defending doubling or tripling the markup just because all the gas stations in town got together and deciding that's how they're gonna roll, that's gouging, and it's also illegal in many jurisdictions.

 

[PeacefulWarrior]

‘Price Gouging’ After a Disaster Is Good for the Public

If government prohibits suppliers from charging more, consumers hoard, exacerbating shortages.

www.wsj.com

This is an emotional topic. I have myself been judgemental of price gougers.
I know this will never sink in to most, but maybe there are a few here willing to put all bias aside and thing with complete rationality here.

Someone charges 50 bucks for a cheap flashlight during a hurricane and people call him evil. Some of Those same hypocrites would gladly offer 50 bucks if they were stuck in that situation. Then turn around and call the person immoral that complied with his request and sold it. Pathetic.

If we allowed price gouging it would be a net benefit to society. It increases supply, and sometimes when it's life and death, when you really need supply.

Oh but it's easier to not think, but emotionally let people die and feel good about ourselves pointing at that nasty price gouger, how we ran him out of town (then oops a storm hit and people died from lack of product).

That might be the most ignorant ****ing thing I've ever seen posted in my life.

And I've seen a lot of ignorant shit posted!

FFS.

 

[Simpletruther]

Question: does the article define or explain what price gouging really is?

I can understand why prices rise after a storm or a major geopolitical event - that's not gouging. That's supply and demand.

It becomes gouging when the outlet selling the supplies or goods is charging at well beyond what they are paying to obtain those resources and goods, relative to what they were paying before. So hypothetically, if your Exxon or Shell station is marking up the price of gasoline by 10% after a hurricane or geopolitical event, then they're not gouging. They're probably not gouging if they hike it up another few percentage points in the immediate short-term, as petroleum prices are fluid. But if they're charging double or triple the rate? Yeah, that's price gouging, and unless there's a fear of a severe supply shock, there's no justification for it.

It really depends on the circumstances. If the WSJ is defending price increases relative to the increase in the price of commodities, then they're right, but then again, that's not price gouging. If they're defending price 'gouging' in the midst of a commodities panic, again, that's probably not gouging. If they're defending doubling or tripling the markup just because all the gas stations in town got together and deciding that's how they're gonna roll, that's gouging, and it's also illegal in many jurisdictions.

At a 10% increase, "Joe Six pack" will be incentivized to take their huge gas cans and stock up "just in case" and there will be shortages, and someone in desperate need will be left out.

Allowing the price to double on the other hand will discourage JOE from this unecessary hoarding, leaving more supply for desperate people.

 

[Simpletruther]

That might be the most ignorant ****ing thing I've ever seen posted in my life.

And I've seen a lot of ignorant shit posted!

FFS.

Why though. Could it be your emotions rather than logic driving this?

The claims seem to be derived from clearly observable human behavior and basic economics.

 

[Court Jester]

‘Price Gouging’ After a Disaster Is Good for the Public

If government prohibits suppliers from charging more, consumers hoard, exacerbating shortages.

www.wsj.com

This is an emotional topic. I have myself been judgemental of price gougers.
I know this will never sink in to most, but maybe there are a few here willing to put all bias aside and thing with complete rationality here.

Someone charges 50 bucks for a cheap flashlight during a hurricane and people call him evil. Some of Those same hypocrites would gladly offer 50 bucks if they were stuck in that situation. Then turn around and call the person immoral that complied with his request and sold it. Pathetic.

If we allowed price gouging it would be a net benefit to society. It increases supply, and sometimes when it's life and death, when you really need supply.

Oh but it's easier to not think, but emotionally let people die and feel good about ourselves pointing at that nasty price gouger, how we ran him out of town (then oops a storm hit and people died from lack of product).

Illegal price gouging contrasted to simply charging whatever the market will bear, are two different ethical questions. When there is a declared state of emergency (and our current oil price crisis is not yet that), then charging somebody more than a reasonable mark up, even one higher than the normal retail price due to the short supply and high demand; this brings into question the ability of society to deal with emergency/exigent circumstances.

Charging somebody $10 for a quart of water after a hurricane hits to somebody who needs that water to survive, is what we are talking about being illegal. And think about it; if a retailer does that in an emergency situation like I described, then what is stop somebody from just taking that water by force and paying them nothing? In that situation would we say that stealing that water was not moral, if it meant keeping a person alive?

But if there was a state of declared emergency, then charging more than a 10% markup for the goods or services would be considered illegal.

Here in California some retailers ended up with HUGE fines for charging stupid high prices for toilet paper after counties and the state initially declared a state of emergency at the beginning of the covid pandemic. There was one particular Asian owned independent store which got its tit caught in the wringer when they were caught charging 4 times the prior retail price for TP, and the local city attorney filed charges to make an example of them. I believe they ened up with 10K fine. Not worth it.

 

[PeacefulWarrior]

Why though. Could it be your emotions rather than logic driving this?

I'm going to answer you so I am not just tossing out a lame insult post and nothing else.

To prevent "hoarding" you put limits on quantity that can be purchased in a trip to a retailer. This way everyone has a chance to get hopefully at least a minimum amount of what they need, necessities. That is what they did in and around my town. Like TP, which I have no freaking idea why so many people thought buying 80 rolls of toilet paper would be necessary, but thats just an example.

You dont want a poor little old lady to have to pay triple the price for a gallon of milk simply because "Pay my price or do without".

Sure its great for profiteers, its horrible for consumers and during emergencies especially its really unethical and shiddy to gouge Grandma simply because you can

The WSJ used to be a respected publication, I remember reading the paper version in the am back in the day before that shitstain Rupert Murdoch turned it into something that isnt fit to line a birdcage with. Now its a laughable POS that nauseates me and I won't ever look at it again. Its just a joke.
I didnt mean to just insult your post, but c'mon man. This shouldn't really need to be explained. "Price gouging is good for consumers"...BWAHAHAHA. -smh-

 

[Simpletruther]

At a 10% increase, "Joe Six pack" will be incentivized to take their huge gas cans and stock up "just in case" and there will be shortages, and someone in desperate need will be left out.

Allowing the price to double on the other hand will discourage JOE from this unecessary hoarding, leaving more supply for desperate people.

I'm going to answer you so I am not just tossing out a lame insult post and nothing else.

To prevent "hoarding" you put limits on quantity that can be purchased in a trip to a retailer. This way everyone has a chance to get hopefully at least a minimum amount of what they need, necessities. That is what they did in and around my town. Like TP, which I have no freaking idea why so many people thought buying 80 rolls of toilet paper would be necessary, but thats just an example.

You dont want a poor little old lady to have to pay triple the price for a gallon of milk simply because "Pay my price or do without".

Sure its great for profiteers, its horrible for consumers and during emergencies especially its really unethical and shiddy to gouge Grandma simply because you can

The WSJ used to be a respected publication, I remember reading the paper version in the am back in the day before that shitstain Rupert Murdoch turned it into something that isnt fit to line a birdcage with. Now its a laughable POS that nauseates me and I won't ever look at it again. Its just a joke.
I didnt mean to just insult your post, but c'mon man. This shouldn't really need to be explained. "Price gouging is good for consumers"...BWAHAHAHA. -smh-

Many people get around the limits by multiple stores and multiple trips, so shortages still manifest. The more important the item the greater this behavior and the greater the resulting shortage, and the more tragic the result when desperate people can't find it.

And This doesn't consider extra supply that gouging creates in the long run. When stores know extra profits exist during this time, they are more willing to go to extra expense, like expanding stock rooms for more inventory seasonally etc. It will be different for different products. There is no dobut the supply would be higher, and more people would get needed goods with allowed gouging.

But yes it comes at a price.

The thing is, the price will be lower than it would have been without gouging, because gougers are able to "name their price" when it's illegal, because the supply is so much lower under illegal conditions.

At the end of the day a desperate person is more likely to find a needed good, and at a lower price if gouging is allowed.

 

[Simpletruther]

Illegal price gouging contrasted to simply charging whatever the market will bear, are two different ethical questions. When there is a declared state of emergency (and our current oil price crisis is not yet that), then charging somebody more than a reasonable mark up, even one higher than the normal retail price due to the short supply and high demand; this brings into question the ability of society to deal with emergency/exigent circumstances.

Charging somebody $10 for a quart of water after a hurricane hits to somebody who needs that water to survive, is what we are talking about being illegal. And think about it; if a retailer does that in an emergency situation like I described, then what is stop somebody from just taking that water by force and paying them nothing? In that situation would we say that stealing that water was not moral, if it meant keeping a person alive?

But if there was a state of declared emergency, then charging more than a 10% markup for the goods or services would be considered illegal.

Here in California some retailers ended up with HUGE fines for charging stupid high prices for toilet paper after counties and the state initially declared a state of emergency at the beginning of the covid pandemic. There was one particular Asian owned independent store which got its tit caught in the wringer when they were caught charging 4 times the prior retail price for TP, and the local city attorney filed charges to make an example of them. I believe they ened up with 10K fine. Not worth it.

Why We Need Price Gouging: Benefits of Raising Prices During Crisis

Learn about the potential economic benefits of allowing stores to raise prices to meet demand. Could "price gouging" prevent shortages of essential goods?

amuedge.com

Here is a good explanation, skip to 3 numbered points it gives.

It is the concern you bring up that gouging actually helps, it helps insure much needed supply goes to those who need it most. And creates more available supply in the long run.

 

[PeacefulWarrior]

Many people get around the limits by multiple stores and multiple trips, so shortages still manifest. The more important the item the greater this behavior and the greater the resulting shortage, and the more tragic the result when desperate people can't find it.

And This doesn't consider extra supply that gouging creates in the long run. When stores know extra profits exist during this time, they are more willing to go to extra expense, like expanding stock rooms for more inventory seasonally etc. It will be different for different products. There is no dobut the supply would be higher, and more people would get needed goods with allowed gouging.

But yes it comes at a price.

The thing is, the price will be lower than it would have been without gouging, because gougers are able to "name their price" when it's illegal, because the supply is so much lower under illegal conditions.

At the end of the day a desperate person is more likely to find a needed good, and at a lower price if gouging is allowed.

OK

 

[multivita-man]

At a 10% increase, "Joe Six pack" will be incentivized to take their huge gas cans and stock up "just in case" and there will be shortages, and someone in desperate need will be left out.

Allowing the price to double on the other hand will discourage JOE from this unecessary hoarding, leaving more supply for desperate people.

Right but if there's, say, collusion of gas stations who control supply available to the consumer, then they can, in theory, charge prices that the supply/demand relationship doesn't justify. That has detrimental effects beyond supply conservation, as it eats into disposable income. Moreover, depending on the scale of it, gouging can lead to demand destruction, which ends up being bad for the sellers themselves. There's a reason gouging - true gouging, not price adjustment - is illegal.

 

[Slartibartfast]

Allowing price gouging will just encourage hoarding and speculation as people succumb to FOMO.