From an economics stand point, I don't understand why the government should ban price-gouging. Doesn't this place an artificial price ceiling that will ensure a shortage of goods? I would personally rather stores have items such as food/water at marked-up prices than not at all.
$5000 per violation of price-gouging in CA
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Re: $5000 per violation of price-gouging in CA
#82Earlier quoted context omitted.
When people charge 10-20X more for something that could have been purchased in a local store before the “arbitrage” businesses purchased all the inventory, that is clearly price gouging.
It depends on the details. The recent NYT article about buying in stores and selling online mentioned that more than 50% of the sale price could be eaten up in shipping and other fees.
It also mentioned them making tens of thousands of dollars in profit in a short time.
Re: $5000 per violation of price-gouging in CA
#83Earlier quoted context omitted.
When people charge 10-20X more for something that could have been purchased in a local store before the “arbitrage” businesses purchased all the inventory, that is clearly price gouging.
It depends on the details. The recent NYT article about buying in stores and selling online mentioned that more than 50% of the sale price could be eaten up in shipping and other fees.
That’s because his business is inefficient. If he had left the products in place there wouldn’t be a scarcity in his local region that he then could profit from. He helped create the scarcity, and then profited from it.
Re: $5000 per violation of price-gouging in CA
#84Earlier quoted context omitted.
Yep, here's that comment. Business benefit over direct customer benefit seems to be the manta these days.
I'm not sure how the parent thinks it will help with shortages, but sales tax adds to the price that the consumer pays. On sales tax holidays you see prices go down.
As I commented below, I don't think someone saying "oh look, I saved 10 cents" is going to stop price gouging. As much use as a chocolate fire guard.
Re: $5000 per violation of price-gouging in CA
#85I'm noticing with Amazon/eBay shut down people have moved to craigslist and alternative resell markets. I see some listings where people are genuinely trying to help (4oz hand sanitizer, two 2oz bottles, alcohol pads, moist wipes) for $20, but these will probably be quickly bought and resold at a premium.
Re: $5000 per violation of price-gouging in CA
#86Earlier quoted context omitted.
Isn't price-gouging usually (and definitely in this context) about someone who bought an item at a standard wholesale price and is reselling it at a markup? That's not about the reward for producing it, that's about the reward for being in the right place at the right time. You can still try to argue that it's economically reasonable to reward people for being in the right place at the right time (to incentivize peop…
Well, from the perspective of the buyer it doesn't matter if you're buying it for 20x the price from CVS or from Joe Schmoe Markup Inc. It matters to CVS, but that's their problem.
No, it matters to the buyer, and everyone else, because that one transaction doesn't exist in a vacuum.
If the buyer is giving the factory an extra 19x the price, the factory is incentivized to produce more, the buyer is substantially more likely to be able to buy more then next time they want to. Averaged over society the buyer is much more likely to be able to buy whatever they need the next time they need to buy anything.
If it's Joe Schmoe Markup Inc getting the extra 19x the price, there is no benefit to society or the buyer. Joe Schmoe is just an asshole profiting off of making other people worse off. That should be criminal.
Re: $5000 per violation of price-gouging in CA
#87Earlier quoted context omitted.
So low wage workers should abandon their jobs to spend their time procuring essentials at reasonable prices? Because right now there's a lot of speculation short-term, but things will go back to normal in a week or so after everyone has enough toilet paper to last until 2050. Free market capitalism frequently generates outcomes that are at odds with a functioning society, and this is just another example.
Free market capitalism has lead to the greatest standard of living ever experienced in the history of the world, especially for citizens on the lowest rungs of society. It may be at odds with your quibbles of modern society, but when viewed holistically I’m so happy that we have clean water, tons of nutritious food, computers, etc. etc. etc.
> clean water
Your clean water generally comes from your government-run water supply, not from a private company. Many of the important discoveries in water purification were made by people who didn't stand to profit from it personally, including English doctor John Snow, German scientist Moritz Traube (who funded himself as a wine reseller), US government contractor George W. Fuller, British officer Vincent Nesfield, etc., all of whom published their research.
> tons of nutritious food
Did you ever hear story of Norman Borlaug the wise? I thought not, it's not a story the libertarians would tell you.
> computers
Like the ones made in communist China? Or even the ones made historically in the Soviet Union, which kept close pace with capitalist America during the early days of the field, both in terms of fundamental research (cf. the Cook-Levin theorem) and in terms of actual production? (Not that calling America "capitalist" is quite fair, given how much of the work took place under publicly-funded universities and how much was done by government-funded military contracts.)
Re: $5000 per violation of price-gouging in CA
#88I see some commenters saying that preventing price gouging will take away the incentive to produce more of a certain good when the demand increases. This doesn't make sense to me.
If, under normal market conditions, producers already make X amount (of , say, toilet paper) due to Y demand at price Z, when the demand spikes to 2Y, if you can produce and sell 2X goods at the same unit cost, you can double your profit without raising the price at all.
One might argue that in order to rapidly increase production capacity, the unit cost will rise as well. But that doesn't necessarily mean that you have to allow prices to rise. As long as the extra investment allows you to produce and sell enough units so that the extra profit is greater than your cost, the incentive is still there. And that's ignoring the fact that a price cap doesn't have to fix the price at current levels - it can limit the increase to a reasonable amount.
Re: $5000 per violation of price-gouging in CA
#89Earlier quoted context omitted.
Yes, that is an an argument. It's just not terribly convincing if you don't already subscribe to the idea that markets are always right, externalities be damned.
High prices induce production that would not have occurred otherwise. They also curve demand downwards so that only those who really want the item will get it. There is little reason to outlaw price gouging save for humans have a disgust response to people who profit from tragic events. Absent these laws, there would be incentive to create stockpiles of needed items before a disaster and retool less-efficient factori…
> High prices induce production that would not have occurred otherwise. They also curve demand downwards so that only those who really want the item will get it.
These are good points.
> There is little reason to outlaw price gouging save for humans have a disgust response to people who profit from tragic events.
There is at least one reason:
Setting a price ceiling means that the distribution of the good will be tilted more towards those with less financial capital than it would be if the price were allowed to climb further. I believe this is a point that many care about for a number of reasons.
I'm not arguing that it's better if you are optimizing solely for maximizing total utility received from the supply of the good, but I would question whether that is necessarily the right course of action.