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$5000 per violation of price-gouging in CA

caloes.ca.gov

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Re: $5000 per violation of price-gouging in CA

#141

Post by mattlutze »

geofft wrote: post #37
whatshisface wrote: post #4

Price isn't just the cost of buying something, it's the reward for producing it. If we see too many price gouging laws, then you can expect shortages as companies find themselves unable to justify extreme measures that would otherwise increase production (at great expense). Secondly, I would expect that localities with price gouging laws will discover that their goods are being re-routed to other places without those…

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…

Price gouging is the supply side artificially raising prices significantly above normal to take advantage of a temporary imbalance in the anxiety vs actual threat being experienced by the demand side.

The day congress declares war on Iran, if you significantly raise fuel prices at your gas station but the wholesale supply hasn't changed, you're generally trying to take advantage of the consumer's fear.

We're for some reason cool with this in the financial markets, but for tangible consumer goods like food and fuel it's (rightly) considered predatory and criminally anti-social. Unchecked gouging can lead to real and dangerous social destabilization.

Re: $5000 per violation of price-gouging in CA

#142

Post by logicchains »

wbl wrote: post #28
logicchains wrote: post #11

Earlier quoted context omitted.

You'll find a similar argument in any basic econ textbook. Put a cap on prices, then when demand rises for something (which normally leads to an increase in price, all other things being equal), the lack of an accompanying rise in price means there is no incentive to produce more of the good (no incentive for more producers to enter the market), so there isn't a corresponding increase in supply. Might work okay in Ch…

The President does have the power to direct factories to make masks during a national emergency.

That would be much more effective at increasing supply than price caps.

Re: $5000 per violation of price-gouging in CA

#143

Post by daveFNbuck »

rahimnathwani wrote: post #138
EdgarVerona wrote: post #95

A lot of people in this thread are willfully ignoring some basic facts here. These products are being made in sufficient quantity for everyone. There is not a significant decrease in production. There is a significant increase in hoarding, and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product. This is not a case of toilet paper suddenly costing more to pro…

"There is a significant increase in hoarding, and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product." People hoarding aren't trying to create artificial scarcity. They are buying because they anticipate scarcity, and want to either (i) be prepared, or (ii) profit from resale. Hoarding has caused shortages which, in turn, justify the original hoarding. This…

Higher prices may encourage hoarding, as people might see the higher prices as a sign of scarcity and want to buy as much as possible before prices increase further or stores run out.

Re: $5000 per violation of price-gouging in CA

#144

Post by kragen »

vikramkr wrote: post #24
anikan_vader wrote: post #16

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.

I think governments would rather that people that get it first have access than the peoplwnehat can't afford it. If you're going to have to essentially have some people not get supplies, basing it off of wealth and income is not politically optimal

Having people line up around the block to be first when the pharmacy opens is perhaps politically optimal but it is not epidemiologically optimal. Except from the point of view of the virus.

Re: $5000 per violation of price-gouging in CA

#145

Post by syshum »

robomartin wrote: post #134
EdgarVerona wrote: post #95

A lot of people in this thread are willfully ignoring some basic facts here. These products are being made in sufficient quantity for everyone. There is not a significant decrease in production. There is a significant increase in hoarding, and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product. This is not a case of toilet paper suddenly costing more to pro…

I agree with the points you are making. I will add that hoarding does increase the cost of producing goods. If the toilet paper manufacturer needs to produce at 10x normal capacity because people are filling their car with the stuff, they will need to increase staff, work more shifts and maybe even buy/rent/build more production equipment. Does this double, triple or quadruple costs? Likely not. Yet costs do increase…

>Perhaps the law we need is one to control hoarding behavior or the rate of change.

Aside from an authoritarian system of governance where all purchases are tracked, and one must only purchase their "allotted" amount of goods, how exactly would one control hoarding?

i hope you are not proposing such a dystopian future.

Re: $5000 per violation of price-gouging in CA

#146

Post by EdgarVerona »

daenz wrote: post #131
EdgarVerona wrote: post #95

A lot of people in this thread are willfully ignoring some basic facts here. These products are being made in sufficient quantity for everyone. There is not a significant decrease in production. There is a significant increase in hoarding, and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product. This is not a case of toilet paper suddenly costing more to pro…

>A lot of people in this thread are willfully ignoring some basic facts here. These products are being made in sufficient quantity for everyone. There is not a significant decrease in production. There is a significant increase in hoarding, and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product. You neglected to mention that demand is increased. If it wasn'…

You neglected to mention that when people see fake headlines about toilet paper scarcity, there's a nontrivial percentage of people who see that as an opportunity for said arbitrage.

There's two kinds of hoarding happening here: fear-alleviating and profit-seeking, which allows the profit seeking form of acquisition to be possible. Several weeks ago, it wouldn't have been feasible for someone to scoop up the entire market. Profit-seeking acquisition is however both a self fulfilling prophecy for the fake headlines about insufficient production, and a means by which the people seeking these products to alleviate fear have their fears justified.

So is your solution "good on them, they're taking advantage of people's fears to help make the rumors true?" Just what price do you think toilet paper should be right now in stores?

Re: $5000 per violation of price-gouging in CA

#147

Post by geofft »

smallnamespace wrote: post #123
EdgarVerona wrote: post #95

A lot of people in this thread are willfully ignoring some basic facts here. These products are being made in sufficient quantity for everyone. There is not a significant decrease in production. There is a significant increase in hoarding, and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product. This is not a case of toilet paper suddenly costing more to pro…

The price of an item is a very blunt instrument. It doesn't distinguish between producers and scalpers/hoarders. Both of those parties are equally incentivized to produce stock and sell it if the price goes up. From the point of view of a potential buyer, toilet paper straight from the factory, and toilet paper from the guy next door who bought some ahead of time are equally good. > This is a case of consumers attemp…

> The higher price means that those who demonstrate a higher desire for an item (by their willingness to pay) end up getting it. The hoarding profits are a charge to the rest of society for a more efficient distribution of the item compared to 0.

> What bothers people here primarily is that hoarders made money while everyone else is suffering.

No, what bothers me is the assumption that "higher desire" means "more willingness [and ability] to pay," and that "more efficient" means "assigned to the people with higher desire." For reasons of life and death (which I, personally, find more important than the principle of a free market), I think a "more efficient" tool should be one that distributes to people with higher need, and need is generally not correlated with ability to pay. It may even be inversely correlated: I as a tech worker can just stay home for weeks, and I haven't needed a drop of hand sanitizer. Someone who drives buses or makes hamburgers can't do that and must be out in the world for their job, and their jobs pay them a lot less than my job does.

So, government rationing would be an "efficient" solution in my definition, yes, but there's a milder option here: use the government's influence to artificially prevent the price of the product from rising. Then there's no incentive for people to buy large quantities with the purpose of reselling it, and it's more likely that everyone will buy the small amount that they need.

Re: $5000 per violation of price-gouging in CA

#148

Post by epicureanideal »

This would seem more fair if they said the price couldn’t be raised by more than 50% or 100% during an emergency. So toilet paper that was $10 would become $20. Not a major problem, and yet it gives producers the margins to keep staff working longer hours to produce more goods.

But no increase over 10%? That gives producers very little margin to work with. (10% is the rate set in the law. See the link.)

Re: $5000 per violation of price-gouging in CA

#149

Post by EdgarVerona »

logicchains wrote: post #125
EdgarVerona wrote: post #95

A lot of people in this thread are willfully ignoring some basic facts here. These products are being made in sufficient quantity for everyone. There is not a significant decrease in production. There is a significant increase in hoarding, and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product. This is not a case of toilet paper suddenly costing more to pro…

>We would be doing our entire society a severe disservice if our solution to this problem is simply "create so much toilet paper that people can't hoard it." The fuck are we going to do with that much toilet paper. If people want that much toilet paper, the only solution that's going to satisfy them is producing all the toilet paper they want. Society is just an aggregate of people, and if enough of them want for wha…

Really? Regardless of the consequences? What becomes of that toilet paper when this fear has subsided? What becomes of the companies that had to scale production, create new factories, hire new workers etc... when the existing glut of supply is not only so much that those new facilities are hurting them, but also that it has decreased the demand for their product even with normal production capabilities?

Re: $5000 per violation of price-gouging in CA

#150

Post by jayd16 »

anikan_vader wrote: post #16

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.

The economics only works out for rational actors. People are temporarily acting irrational. Desire to gouge and fear of being gouged are causing a run on goods because people are in a panic. Hopefully this will stem temporary silliness.

And this is an order on gouging, not price fixing.

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