$5000 per violation of price-gouging in CA • Hacker News Board

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

#311

Post by rahimnathwani » Sat, Mar 14, 2020, 6:53 PM UTC

saghm wrote: post #299

rahimnathwani wrote: post #138

Earlier quoted context omitted.

"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…

> 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 How would (ii) be a profitable activity if buying in bulk wasn't creating artificial scarcity? I mean, I guess you could argue that the scarcity isn't "artificial", but like, when someone is literally buying more hand sanitizer than they could…

It's a profitable activity if there is scarcity in the future, regardless of whether I can influence that scarcity.

smallnamespace's made the same point as I made in the portion you quoted, but made it much more clearly:

"To a very good approximation, the marginal impact of any hoarders on the scarcity of a product is zero. Hoarders are not trying to drive scarcity themselves, they are trying to buy a product now because they think the price will rise, but they're not trying to make the price rise by buying it. The distinction is important!"

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

#312

Post by hansvm » Sat, Mar 14, 2020, 6:53 PM UTC

jbay808 wrote: post #287

_bxg1 wrote: post #248

Earlier quoted context omitted.

> People hoarding aren't trying to create artificial scarcity https://www.nytimes.com/2020/03/14/technology/coronavirus-pu... > 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 st…

Another example: https://www.thestar.com/news/canada/2020/03/13/amazon-blocks... > Ranga said that a six-pack of wipes, which might sell for $20 at Costco, could fetch four times that online, representing a “big opportunity.” He said the couple had spent about $70,000 on Lysol wipes and liquid cleaners over the past few weeks I don't think someone buying $70k of Lysol is doing it because they're worried they'll run o…

I think the argument being made is that these individuals are creating scarcity as a byproduct of their intended goal, not as a goal in itself. If they wanted to profit from the scarcity they induced, they would attempt to resell the items they bought in the original locales rather than at online venues.

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

#313

Post by kevingadd » Sat, Mar 14, 2020, 6:53 PM UTC

bob1029 wrote: post #256

justinzollars wrote: post #61

Price-gouging would correct the toilet paper hoarding problem.

Allowing prices to directly track available inventory seems like an excellent approach. The problem will self-correct very quickly as 4-packs of toilet paper begin to exceed $20. As inventory is replenished, prices could begin to drop again. Yes - this sucks for someone who really wanted toilet paper that day, but at the same time it ensures more conscientious spending where absolutely required. I usually don't check…

"actively decide not to buy any that day" and not wipe your rear end after using the toilet? If you're out of paper towels or soap and the cost is 50x the usual you're just gonna not wash your hands? Think through the consequences here. Not everyone can afford to stockpile stuff like this in advance, some people live paycheck-to-paycheck. I've got a couple weeks of paper products in reserve typically, not 2 months worth - and if the timing is bad I might be down to a week's supply. Thankfully in this case I restocked just before things got bad but if this lasts I'll have to deal with shortages just like everyone else. I'm actually out of hand soap refills...

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

#314

Post by gwright » Sat, Mar 14, 2020, 6:54 PM UTC

geofft wrote: post #119

hirundo wrote: post #109

I think that setting a price on something is best considered as a form of speech, even if it isn't exactly the same thing. A price is a statement of the value you believe that a thing has. As a free speech advocate I believe people should be able to express such value judgments freely with few constraints. A price signal is similar to other signals we can make with speech, in that it has the potential to change behav…

Setting a price on something is absolutely a form of speech, yes, in the sense that the whole point of free markets is communication / price discovery. It's specifically a form of speech in which richer people can speak things that poorer people can't.

And how do the "poor" benefit from an empty shelf?

This argument about poor people not being able to afford TP at 2x, 3x, or even higher prices doesn't make any sense to me. Especially when we are talking about a very short term situation. It isn't like all the TP factories have suddenly vanished. People will adjust, even poor people.

Letting the price float is the best way to quickly extinguish the irrational behavior. Preventing the price from increasing is the best way to ensure a longer period of shortage (or complete unavailability).

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

#315

Post by gwright » Sat, Mar 14, 2020, 6:58 PM UTC

rtkwe wrote: post #219

leptoniscool wrote: post #151

In a free-market, sellers and buyers will find an equilibrium price at which goods can be exchanged for money. When an outsider such as a government artificially sets the price (or forces the price to stay constant), there will be shortages or overproduction.

Stores and manufacturers aren't actually charging increased prices in the majority of cases here. It's people buying out those stores and selling. If manufacturers don't see the increased prices the Econ 101 logic breaks down.

They should be charging increased prices. They should have charged increased prices the moment demand went up (like Uber surge pricing). That would have snuffed out the speculators right quick.

One reason they don't do this is because of the attitudes illustrated in the comments here. People irrationally believe that surge pricing in this case is wrong and the negative response by their customers outweighs the benefits of surge pricing. I believe that attitude about surge pricing is wrong and it is one reason why we end up with shortages. It is a terribly self-defeating attitude that exacerbates the situation.

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

#316

Post by yyy888sss » Sat, Mar 14, 2020, 6:59 PM UTC

gruez wrote: post #288

yyy888sss wrote: post #264

Earlier quoted context omitted.

Australian supermarkets are refusing refunds on all of these hoarded goods.

I wonder whether that's legal or not. Presumably they bought the goods before this thing blew up and the terms of sale at the time of purchase allowed for returns. Are stores allowed to retroactively change their return ploicy? Do they have a "we can deny returns for any reason" clause in their return policy? Is that legal?

In Australia we have strong consumer protection, but not for changing your mind. It's a courtesy most retailers offer but you clearly don't deserve it when you realise you don't need 2000 tools of tp.

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

#317

Post by stevespang » Sat, Mar 14, 2020, 7:00 PM UTC

Funny how price gouging NEVER applies to doctors and lawyers - - - seemingly only to tree co's after hurricanes, contractors, and the like.

But when your freedom or your health is at risk, then the medical community and the lawyers can screw you over all they want - - - at no real risk to them.

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

#318

Post by gwright » Sat, Mar 14, 2020, 7:02 PM UTC

karamanolev wrote: post #36

ZhuanXia wrote: post #17

Earlier quoted context omitted.

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…

I do agree with the inducing production part. Where this massively fails is the "only those who really want the item will get it". This is really "the wealthy can afford the item without batting an eye and the poor be damned". Not exactly a great idea for essential items.

It is not that. A higher price doesn't magically mean that rich people get it and poor people don't. Everyone will respond to that price signal and adjust their behavior.

Everyone will also change their priorities. There seems to be this idea that there are millions upon millions of people who have a fixed budget and purchase plan that has no room for adjustment at all. I don't think that is true, it is a myth.

And in any case, if the preferred policy of not letting prices float results in a completely empty shelf in the grocery store, please explain to me how the poor, middle class, or rich are going to purchase anything from that empty shelf?

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

#319

Post by gwright » Sat, Mar 14, 2020, 7:04 PM UTC

salawat wrote: post #297

gwright wrote: post #267

Earlier quoted context omitted.

Letting the price float is the fastest way to discourage the hoarders and let the market come back to a sane equilibrium. By not allowing the price to float you can see that the result is empty shelves. The empty shelf is also a "real, human consequence".

The price float shouldn't happen . Furthermore, an alternative measure, social ostracization/legal pressure is being employed to remedy the situation. Existence is not the Market, and the Market does not take place in a void. You cannot reduce the world to a bunch of economic models, because at the end of the day, people will get tired of your Quant's BS and do something that generally doesn't end well for the person…

The price float did not happen and what was the result? Empty shelves. Is that a satisfactory outcome from your standpoint?

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

#320

Post by jbay808 » Sat, Mar 14, 2020, 7:06 PM UTC

hansvm wrote: post #312

jbay808 wrote: post #287

Earlier quoted context omitted.

Another example: https://www.thestar.com/news/canada/2020/03/13/amazon-blocks... > Ranga said that a six-pack of wipes, which might sell for $20 at Costco, could fetch four times that online, representing a “big opportunity.” He said the couple had spent about $70,000 on Lysol wipes and liquid cleaners over the past few weeks I don't think someone buying $70k of Lysol is doing it because they're worried they'll run o…

I think the argument being made is that these individuals are creating scarcity as a byproduct of their intended goal, not as a goal in itself. If they wanted to profit from the scarcity they induced, they would attempt to resell the items they bought in the original locales rather than at online venues.

I think Costco would void their membership pretty quick if they were reselling right there in the parking lot.

Edit -- but apparently that's not enough to deter some from trying:

https://www.reddit.com/r/vancouver/comments/fimz9k/was_leavi...