Bans on price gouging

[alfred russel]

Count me on the "it's not price gouging, its the free market at work" side of things.

Normally say yes. But not in times of national emergencies.

Why not?  We see what happens when the price doesn't increase.  Demand spikes and there are then instant shortages.  Which just encourages people to hoarde and buy as much as they can.

Right now you can't buy masks, lots of places are out of toilet paper, etc.  If stores had just increased their price you'd be able to walk into a store and buy them if you needed them badly enough.

It would be so much better. We could buy all the things we need, and for reserve, while the poor people would leave empty handed. We just would need to remember to also visit the gun store, so we would have all the guns when the revolution arrives.

I think rationing is a better system in an emergency with suddenly scarce resources.

[Malthus]

Count me on the "it's not price gouging, its the free market at work" side of things.

Normally say yes. But not in times of national emergencies.

Why not?  We see what happens when the price doesn't increase.  Demand spikes and there are then instant shortages.  Which just encourages people to hoarde and buy as much as they can.

Right now you can't buy masks, lots of places are out of toilet paper, etc.  If stores had just increased their price you'd be able to walk into a store and buy them if you needed them badly enough.

The flaw in this argument is that not everywhere has anti-gouging legislation, or it is not enforced everywhere, yet shortages still happen. In the US, only 13 states have anti-gouging legislation, apparently. Yet hoarding is seen all over.

The reason, I suspect, is that there simply hasn't been time for 'the market' to step in and (say) ship toilet paper from where there is plenty, to where there is none, at a high price - any faster at least than actual supply channels (as there isn't, in fact, a real shortage).

Markets are infinitely fast only in theory ... in reality, there are gaps and lags, so even places where prices are unrestrained will see shortages and hoarding. Legislation to restrain 'irrational price exuberance' may actually be beneficial in lessening hoarding, as the population will be reassured that normalicy will endure. Seeing "Toilet paper: $50" signs would make hoarders of everyone.

[Barrister]

I think rationing is a better system in an emergency with suddenly scarce resources.

Rationing takes time to set up though.

[Admiral Yi]

Rationing takes time to set up though.

Ad hoc, informal rationing like "limit 2 per customer" is very easy to set up.

Also very easy to game, unfortunately.

[Josquius]

Rationing takes time to set up though.

Ad hoc, informal rationing like "limit 2 per customer" is very easy to set up.

Also very easy to game, unfortunately.

Ish. You can still buy more than 2 by going store to store or coming back later, but it does massively reduce the efficiency of your buying.
Few rules are perfect and completely stop undesirable outcomes but every little helps

[Sheilbh]

Ish. You can still buy more than 2 by going store to store or coming back later, but it does massively reduce the efficiency of your buying.
Few rules are perfect and completely stop undesirable outcomes but every little helps

Public shaming - also for people breaking the social distancing rules.

[Admiral Yi]

Ish. You can still buy more than 2 by going store to store or coming back later, but it does massively reduce the efficiency of your buying.
Few rules are perfect and completely stop undesirable outcomes but every little helps

I drop my two rolls of TP in the car, pick up two more and go through a different check out lane, one where the cashier doesn't recognize me.

[Josquius]

Ish. You can still buy more than 2 by going store to store or coming back later, but it does massively reduce the efficiency of your buying.
Few rules are perfect and completely stop undesirable outcomes but every little helps

I drop my two rolls of TP in the car, pick up two more and go through a different check out lane, one where the cashier doesn't recognize me.

Which will take you half an hour to get 4 rolls vs. Half an hour to get 60 without the limits.

[Admiral Yi]

It takes you 30 minutes to buy two rolls of TP?  No wonder she had to close those mines.

Another dodge would be to borrow four kids from your neighbor and buy 2 rolls for each of them.

[Josquius]

It takes you 30 minutes to buy two rolls of TP?  No wonder she had to close those mines.

Another dodge would be to borrow four kids from your neighbor and buy 2 rolls for each of them.

I was assuming queues in the supermarket and having to walk to the car and back.

There are ways to cheat it easily of course. But it is besides the point. Speed bumps help reduce shortages and help encourage proper behaviour

[The Larch]

I assume this discussion is because of cases like this one?

He has 17.700 bottles of hand sanitizer and nowhere to sell them
Amazon cracked down on coronavirus price gouging. Now, while the rest of the world searches, some sellers are holding stockpiles of sanitizer and masks



On March 1, the day after the first coronavirus death in the United States was announced, brothers Matt and Noah Colvin set out in a silver S.U.V. to pick up some hand sanitizer. Driving around Chattanooga, Tenn., they hit a Dollar Tree, then a Walmart, a Staples and a Home Depot. At each store, they cleaned out the shelves.

Over the next three days, Noah Colvin took a 1,300-mile road trip across Tennessee and into Kentucky, filling a U-Haul truck with thousands of bottles of hand sanitizer and thousands of packs of antibacterial wipes, mostly from "little hole-in-the-wall dollar stores in the backwoods," his brother said. "The major metro areas were cleaned out."

Matt Colvin stayed home near Chattanooga, preparing for pallets of even more wipes and sanitizer he had ordered, and starting to list them on Amazon. Mr. Colvin said he had posted 300 bottles of hand sanitizer and immediately sold them all for between $8 and $70 each, multiples higher than what he had bought them for. To him, "it was crazy money." To many others, it was profiteering from a pandemic.

The next day, Amazon pulled his items and thousands of other listings for sanitizer, wipes and face masks. The company suspended some of the sellers behind the listings and warned many others that if they kept running up prices, they'd lose their accounts. EBay soon followed with even stricter measures, prohibiting any U.S. sales of masks or sanitizer.

Now, while millions of people across the country search in vain for hand sanitizer to protect themselves from the spread of the coronavirus, Mr. Colvin is sitting on 17,700 bottles of the stuff with little idea where to sell them.

Apparently he ended up donating them.

https://www.nytimes.com/2020/03/14/technology/coronavirus-purell-wipes-amazon-sellers.html

If those guys are valiant entrepreneurs riding high on capitalism, I guess that war profiteers are too, right?

[Oexmelin]

It takes you 30 minutes to buy two rolls of TP?  No wonder she had to close those mines.

Another dodge would be to borrow four kids from your neighbor and buy 2 rolls for each of them.

Tyr has the gist of it. Most people who panic buy are not about thinking creatively in order to game the system, as you are doing here. They impulse buy because they can, and because they are afraid of  inequality. Saying 2 per customers, and enforcing it already sends a message that everyone is on equal footing.

(Incidentally, this is also why one all those "economic interactions" game-studies are often teaching people to maximize their advantage, rather than neutrally observe how people behave).

[Admiral Yi]

Tyr has the gist of it. Most people who panic buy are not about thinking creatively in order to game the system, as you are doing here. They impulse buy because they can, and because they are afraid of  inequality. Saying 2 per customers, and enforcing it already sends a message that everyone is on equal footing.

(Incidentally, this is also why one all those "economic interactions" game-studies are often teaching people to maximize their advantage, rather than neutrally observe how people behave).

I didn't say anything about the number of people that would try to game the system.  I said it would be relatively easy to do.

[Josquius]

But that's not the point. We aren't trying to stop people being smart and having their wife go through the checkout separately. Frankly we can live with a few people buying double the quota.
I'm sure they will feel very proud of themselves for doing this. They beat the system. Hurray them.
But the overwhelming majority of people won't do this. Even those people who are sad enough to want to spend their time scoring cool rebel points by disobeying the rules have finite time.

[Admiral Yi]

But that's not the point. We aren't trying to stop people being smart and having their wife go through the checkout separately. Frankly we can live with a few people buying double the quota.
I'm sure they will feel very proud of themselves for doing this. They beat the system. Hurray them.
But the overwhelming majority of people won't do this. Even those people who are sad enough to want to spend their time scoring cool rebel points by disobeying the rules have finite time.

If that's not the point why did you choose to dispute it when I first raised it?  You could have verily easily said "that's true, but on the other hand..."  Then we would all be singing kumbayah now.