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One example is a pandemic.
The point is that capping the price of e.g. masks means _fewer masks_ are produced, which is worse for stopping the pandemic.
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…
Yep. A much better way to alleviate shortages would be to suspend sales taxes.
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That's just poor reasoning on multiple levels: it assumes supply, the argument that it prevents hoarding misses that as prices are driven up the incentive to hold increases, and it overlooks that some populations night need the good immediately so real harm is being done. The gain is personal, the harm is social, this is ethics 101 and solipsistic pseudo-libertarion reasoning doesn't make it right.
I would rather the price 10x if it means people can buy toilet paper, than have it be unavailable to all. But I am thinking rationally rather than emotionally.
One scenario is that a few people have taken advantage of low prices to hoard unreasonable amounts.
A second scenario is that the number of people buying a reasonable amount exceeded the assumptions built into the distribution network.
In the latter scenario, high prices pretty much go in the pocket of the retailer (and so on), and availability is still low.
My intent isn't to try to characterize the second scenario as good or bad or okay or whatever, it's to point out a possibility that your comment doesn't address.
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.
Earlier quoted context omitted.
That's just poor reasoning on multiple levels: it assumes supply, the argument that it prevents hoarding misses that as prices are driven up the incentive to hold increases, and it overlooks that some populations night need the good immediately so real harm is being done. The gain is personal, the harm is social, this is ethics 101 and solipsistic pseudo-libertarion reasoning doesn't make it right.
>solipsistic pseudo-liberation reasoning Basic economics is solipsistic pseudo-liberation reasoning now?
Not every point on the supply/demand curve is a good place to be.
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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
If we look at who it's most dangerous too, elderly people, then basing it off wealth would actually be in their favour compared to basing it off who can get to stores quicker to hoard it.
Case in point: I luckily found some hand gel still for sale online. Probably the very last one around here. So I stocked up - not resale quantities (thought it would have been trivial) but definitely more than I needed - something like 10 pieces. Why? Because the price was low and I'm doubtful I'll get to see any more this year.
If the price had been even slightly elastic, I wouldn't have bought 10 pcs for $10 each. I would have probably spent about the same, and gotten 2 or 3. Even better, I would probably still be able to get it from the groceries store, without any shortage - and buy just one as needed.
So we have two scenario: if the prices stay the same some people stock up early, and most are left without. If the prices go up proportionally, we end up spending a trivial amount more (let's be honest, spending an extra $7 on hand gel is not a tragedy) but we have no supply problems. First because there is much less stocking up, and then because everybody is incentivised to produce and sell more.
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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.
The reason the water is clean and the food is nutritious is due to regulations, not free market capitalism.
There's a similar law in California that allows individuals to sue businesses who offer you a contract that forbids leaving negative feedback on review sites. We had a garage door company offer us a contract that included such a provision. We didn't sign it, went to court, and quickly got a judgement for $2,500, which they paid.
(Here's information on that law:)
https://racohenlawfirm.com/fines-for-trying-to-stop-bad-onli...