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Comment by vkou | Hacker News Reader

Scalpers don't 'partially fix the problem'. They don't create new Switches.

They have two effects.

1. They change the distribution of a good from a lottery, to a 'whomever pays more gets it' auction.

2. Depending on how they acquire the good, they may or may not have a positive impact on the original vendor.

Because of #1, depending on your personal values, you can make a very compelling argument that lottery-based distribution of scarce goods is fair, and that turning it into an auction-based distribution (While pocketing the difference) is immoral.

#2 is applicable for things like concert tickets (Where scalpers take on risk, and provide guaranteed, but bounded revenue for the artists/venue), but is probably less applicable for video games/devices (Where unsold scalper inventory will likely be returned for a refund - at no risk to the scalper.)

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> 1. They change the distribution of a good from a lottery, to a 'whomever pays more gets it' auction.

The original distribution was hardly a lottery, it was a competition on latency (i.e. competition to be first in line). They change the distribution of some of the supply from a competition on latency to a competition on price. Consumers vary in their ability and preference to compete on latency, and in their valuation of the time/pleasure trade-off. Assuming a fixed supply of switches (in the short term), scalpers add value for those consumers whose preferences are such that they would in this instance prefer to compete on price rather than latency, and are willing to pay the going premium for not having to compete on latency. Without the scalpers, these consumers would have no option but to wait for new supply. There's really nothing unfair going on.

Side note, high frequency trading is kind of an interesting example of the converse situation, where inability to compete on price forces everyone to compete on latency. Because the exchange has a minimum "tick size" for changes in price (a penny or tenth of a penny, or whatever, depending on the exchange), there comes a point where it is no longer possible for buyers and sellers to compete with each other further on price, and so the only thing left to compete on is latency.

First in line, lottery, whomever waits longest in line... In many value systems, these are all more 'democratic' or 'fair' methods of distribution, then 'person with the most money.'

It's one optimization function, but not necessarily the best one. Especially when the original vendor does not see a penny of the scalper windfall.

The same number of consumers have no option but to wait for new supply, with or without scalper involvement.

The only thing that changes is the demographic of those consumers.

HFT arguably reduces spreads, and carries entirely different costs. It's not really comparable.

Nintendo's already sold 1.5 million units in its first week. The Xbox one sold 3 million in its first month. Arguably, Nintendo on purpose let out fewer units than it needed to supply demand. They seem to use shortages as a marketing ploy from past releases. So the interested gamer has these two factors going against him/her: 1. the supplier cuts supply to gin up free marketing and 2. scalpers making an already hard to find item even more difficult to find. I think that's double the 'unfair' and thus not cool, bro.

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