'Price Gouging' After a Disaster Is Good for the Public

1 pointsposted 7 hours ago
by bilsbie

9 Comments

Ukv

5 hours ago

> That’s because high prices are an essential way to ensure that resources get where they are desperately needed. [...]

In a vacuum, if all else is fixed, it would be true that those willing to pay more for a resource are those with greater need for it, but in reality a person's income/savings is a huge factor in how much they're willing/able to pay.

Price hikes can inhibit necessary usage by the less wealthy while barely doing anything to discourage unnecessary usage by the wealthy. I think the "let the free market take care of it" approach fails as a form of rationing because it biases resource allocation away from those who are most likely to truly have no other option.

A first-come-first-served rush isn't great either, but it isn't the only alternative. Flights allocated based on danger of area and availability of other transport options, for instance - it won't be perfect, but would be more in the right direction.

> True, the rising price of goods like gasoline can create problems for consumers, particularly the poor. But these drawbacks are negligible [...]

The "problems for consumers, particularly the poor" include, for instance, dying due lack of means to escape. That the less wealthy are disproportionately affected by natural disasters is a primary issue, not a footnote to discard as "negligible".

RoyTyrell

7 hours ago

While I agree with these economic ideals can work this way, it also has a lot of assumptions. Many folks who make these claims are naive or lying and rarely preface by saying they assume an ideal world with consumers and suppliers that are all operating rationally with (near) perfect competition with low and equal startup costs for suppliers entering new areas. These ideals also assumes that any new suppliers can and will significantly lower their prices to remain competitive, driving down costs.

derbOac

6 hours ago

I agree. Our state AG filed a lawsuit after the pandemic — I don't even really remember exactly what goods it involved — but my impression at the time is that these things don't always covary in the way the article assumes. Increased prices don't necessarily bring down hoarding, and can actually exacerbate it if there's a perception that the goods are now much more valuable. Relatedly, it's also dangerous to assume that the sellers and suppliers don't overlap with the hoarders in controlling or otherwise unnecessarily restricting supply.

I was a little disappointed in the focus on price gouging as a policy platform — I think in many cases there's an underlying, simpler antitrust or price fixing prototype up the chain somewhere that could be applied to a given price spike phenomenon. But I'm not sure defending price gouging is really warranted either.

user

7 hours ago

[deleted]

user

7 hours ago

[deleted]

bilsbie

7 hours ago

[flagged]

user

7 hours ago

[deleted]