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

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

#91

Post by yladiz » Sat, Mar 14, 2020, 4:05 PM UTC

daenz wrote: post #56

yladiz wrote: post #26

Earlier quoted context omitted.

No, it ensures that companies (and individuals) won't increase the price unnecessarily just to profit additionally from something like a pandemic.

...by placing an artificial price ceiling that will ensure a shortage of goods. In a pandemic, prices go up, rightly or wrongly, because there is an increased demand. This price scales as the difference between supply and demand grows, in order to decelerate how fast the shortage occurs relative to the speed of creating the good. The price ceiling just means the shortage happens immediately.

But what is the price ceiling in this case? I fail to understand this argument, as this doesn't regulate the price of manufacturing a good but rather then price of its sale. If manufacturers aren't the ones setting the high prices then why would they be disincentivized to make more goods?

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

#92

Post by AsyncAwait » Sat, Mar 14, 2020, 4:06 PM UTC

whatshisface wrote: post #72

AsyncAwait wrote: post #42

Earlier 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.

The problem, from what I saw, is hoarders having stock piled 17,000 hand sanitizers and the like, not official stores selling them for too high a price.

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

#93

Post by Erikun » Sat, Mar 14, 2020, 4:06 PM UTC

whatshisface wrote: post #63

will_walker wrote: post #39

Earlier quoted context omitted.

This isn’t the companies being punished - it’s the opportunists. These vultures are driving to every small pharmacy and clearing out all the masks and sanitizer. Now that Amazon & EBay have cracked down on reseller gouging, some are sitting on stockpiles through the midst of a pandemic. * https://www.nytimes.com./2020/03/14/technology/coronavirus-p...

Why don't the pharmacies raise their own prices 20x before the scalpers can get to them? The answer is probably, "they don't want to get slapped by gouging laws." So in essence this is a prohibition scenario where lawful providers don't want to touch the situation and unlawful people fill the gap.

Isn't it more likely that regular sellers want to protect their brand, something that the arbitrage seller doesn't care about? After all, the California price-gouging law only takes effect once an emergency has been declared and regular stores, presumably, weren't increasing their price by 20x before that.

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

#94

Post by ikeboy » Sat, Mar 14, 2020, 4:06 PM UTC

Erikun wrote: post #82

ikeboy wrote: post #58

Earlier quoted context omitted.

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.

And tens of thousands in losses for products that were stuck. As I mentioned in my comment on the original article, the required margin goes up to account for risk.

https://news.ycombinator.com/item?id=22576051

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

#95

Post by EdgarVerona » Sat, Mar 14, 2020, 4:06 PM UTC

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 produce. The price gouging law is not bringing toilet paper to levels where the producer of the product is taking some kind of operating loss or even reduction in profit of any kind. This is a case of consumers attempting to create small niches of artificial scarcity so that they can profit.

The free market arguments being made here are baffling, and willfully ignoring the aforementioned truths of this specific set of circumstances that have driven these specific laws. Have we lost all sense of humanity for the sake of our ideology?

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.

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

#96

Post by rickyc091 » Sat, Mar 14, 2020, 4:07 PM UTC

ikeboy wrote: post #58

Dangeranger wrote: post #27

Earlier 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.

"A nearby liquidation firm was selling 2,000 “pandemic packs,” leftovers from a defunct company. Each came with 50 face masks, four small bottles of hand sanitizer and a thermometer. The price was $5 a pack. Mr. Colvin haggled it to $3.50 and bought them all."

"He quickly sold all 2,000 of the 50-packs of masks on eBay, pricing them from $40 to $50 each, and sometimes higher. He declined to disclose his profit on the record but said it was substantial."

$100,000 gross revenue ($50 each), let's say shipping, fees, and price variance were 25%. That's still $75,000 for a $7,000 investment. 10x returns.

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

#97

Post by newbie578 » Sat, Mar 14, 2020, 4:08 PM UTC

avip wrote: post #79

Reading this thread is the official confirmation that Americans are out of their mind.

Absolutely, I cannot fathom how people are so anti-government that they cannot see the forest from the tree.

These types of situations are textbook explanations for WAR PROFITEERING (except we are in a crisis instead of war).

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

#98

Post by salawat » Sat, Mar 14, 2020, 4:08 PM UTC

ZhuanXia wrote: post #17

herbstein wrote: post #6

Earlier 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…

Markets exist on the pre-supposition of a smoothly functioning society/civilization in which to conduct business; i.e. one not under the pressure of a perceived existential threat. The work exists to be done regardless of how "market signals" make it appear, and last time I checked, nobody has a great track record of either "making" or "applying" an economic wrench in ways that have had very satisfying results in about the last 30 year's or so. We want healthy people, and a minimally burdened healthcare system unroll either herd immunity, or pharmacological treatment becomes possible.

In short, pick up a shovel, and get to work. The Market will continue when people stop fearing existential threats.

Whether or not an economist is happy with that state of affairs is beside the point. Economists don't run the country. People do. Contrary to popular belief, most people are fine leaving money on the table as long as it pays off in the long run in terms of not losing those they care about.

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

#99

Post by ikeboy » Sat, Mar 14, 2020, 4:08 PM UTC

Dangeranger wrote: post #83

ikeboy wrote: post #58

Earlier quoted context omitted.

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.

He's not necessarily selling to the same region as it was bought from, as the original article mentions.

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

#100

Post by tracker1 » Sat, Mar 14, 2020, 4:09 PM UTC

whatshisface wrote: post #54

geofft wrote: post #37

Earlier 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.

If you're buying from retail and re-selling at over 4x the purchase cost, that's gouging... not even wholesale pricing, but retail.