[derefr]

Market arbitrage is 'wrong' insofar as, if someone "deems [the product] worth that price", then the compensation for the created value should go to the people who created that value. To do otherwise is to deprive the market of the signalling tokens (dollars) it uses to propagate information about what things there should be more of, back to the people who make things.

The ultimate arbitrage, after all, is communism, where a central actor soaks up all the profits, and then is left with the responsibility of figuring out who should make more of what themselves, because hell if the producers know.

[mikeash]

The only people depriving the market of the signaling tokens are the sellers charging an price where they know that demand will far outstrip their ability to supply the product.

The market way to handle a small supply of a popular product is to charge a high price, so that purchases equal production. All the compensation goes to the people who created the value, and the people who value the product the most are the ones who are able to obtain it.

Of course, Nintendo doesn't want to charge $1,200 (or whatever) for this product, because it would make people upset. So they set an artificially low price and deal with shortages for a while. Or maybe the shortages are a feature, driving demand through perceived social pressure.

They're certainly allowed to do that. But that's Nintendo screwing with the market and trying to defy economics. Arbitrageurs are just putting things back the way they would naturally be.

Note how companies and industries which are not afraid to charge high prices for products in high demand rarely suffer from scalpers.