[Consultant32452]

Do you believe that, absent price gougers, I would be able to walk into Home Depot, CVS, Walmart, etc. and buy some N95 masks for my personal use? I don't think that's likely, so wherever you were heading with that is irrelevant.

I want to be clear I'm intentionally separating two things. The gouger is making product available on the market where otherwise there would be none. The higher price discourages hoarders or others with lower needs. This is clearly a valuable service that some, perhaps many, are willing to pay for. I feel like these are indisputable facts.

There is a separate topic of moralizing about the issue, whether or not you think the gouger is a bad actor or whatever. You can keep going on about that, but I won't address it because I don't care about your feelings regarding my personal health.

[jcranmer]

What you're missing is that, in the timescales at issue with price-gouging, both supply and demand are inelastic. So at, say, $10, you'd have 100 units of supply and 200 units of demand, while at $20, you have... 100 units of supply and 200 units of demand.

Higher prices don't discourage hoarders, because a fair fraction of the hoarders are going to be people who are planning on reselling them to desperate people, so they're virtually guaranteed a profit. If you want to discourage hoarders, then enact purchasing limits: limit 1 per person.

[Consultant32452]

I dismiss the idea that demand is inelastic. At $1/mask basically everyone wants an N95 mask. At $1k/mask most consumers are going to wear a bandana or alternative type of mask.

[jcranmer]

Sure, demand isn't perfectly inelastic. But at the price points we're talking about, the demand isn't dropping off fast enough to make the market look even close to equilibrium.

But I noticed you didn't even attempt to engage with the solution of enforcing purchasing quotas instead of allowing price gouging.

[Consultant32452]

Enforcing purchasing quotas does not allocate resources to where they're most needed.

Pricing (including gouging) may be imperfect, but it is better than central resource allocation, price fixing, etc. at leading to efficient allocation of resources.

[jbay]

> The higher price discourages hoarders or others with lower needs.

Others with lower means, you meant?

[Consultant32452]

With central planning, resources go to the politically connected. So it's no different, the poor are reliant on better connected and/or wealthier people to provide them with some resources.

Pricing (which includes 'gouging') is not perfect, but it's better than central planning, price fixing, and quotas at efficient allocation of resources. At the very least it provides a 'wisdom of the crowds' affect where anyone with enough money can reallocate some of the resources to a location of need that might lack visibility to the hand full of people that would hypothetically be centrally planning all the resource allocation.

[jbay]

Wait, who was proposing or even talking about central planning in this thread? I think you're the first. I was going to propose we allocate resources by sacrificing goats to the thirteen forgotten gods of the underworld, and then interpret their bones for wisdom.

I just wanted to clarify that when you said higher prices discourage those with lower needs, what you really meant is that it discourages those with lower means-weighted-needs. Which is to say, it discourages the desperate-but-poor, rebalancing demand toward the less-desperate-but-more-wealthy.

[Consultant32452]

The other alternatives proposed all over this thread such as purchase quotas, price fixing (stopping gouging), etc. are all central planning solutions. And those types of solutions are worse at efficient resource allocation than pricing and are less likely to get resources where they're needed most regardless of means or desperation.

Pricing spreads the capability of resource allocation around. In the central planning model the poor desperate person is reliant on a tiny group of central planners to allocate them some resources, and the central planners may not see that particular poor/desperate group. With the pricing model, anyone with the means can allocate resources where they see a need. In both scenarios the poor are reliant on someone else to allocate them resources. In the pricing model, the poor person has a better chance of being seen by at least someone with the means to make it happen.

[jbay]

You sound very certain about this. Where does that certainty come from?

[Consultant32452]

If you have an interest in learning the core concepts of economics I can't speak highly enough about "Basic Economics" by Thomas Sowell. It provides a really great understanding of economics using history and lots of real world examples to explain the concepts in plain English. It's non-technical enough that the audio book is an excellent fit.

https://www.amazon.com/Basic-Economics-Fifth-Common-Economy/...

[gruez]

This is pretty mainstream economics.