>The guy buying up all the masks and reselling them for 10x the price is price gouging. He doesn't make anything.
The guy buying up all the masks and reselling them for 10x the price is making availability, which is highly important in a crisis.
The guy buying up all the masks and reselling them for 10x the price is making availability, which is highly important in a crisis.
The availability is primarily negatively impacted because of hoarders and gougers.
I want to be clear I'm intentionally separating two things. The gouger is making product available on the market where otherwise there would be none. The higher price discourages hoarders or others with lower needs. This is clearly a valuable service that some, perhaps many, are willing to pay for. I feel like these are indisputable facts.
There is a separate topic of moralizing about the issue, whether or not you think the gouger is a bad actor or whatever. You can keep going on about that, but I won't address it because I don't care about your feelings regarding my personal health.
Higher prices don't discourage hoarders, because a fair fraction of the hoarders are going to be people who are planning on reselling them to desperate people, so they're virtually guaranteed a profit. If you want to discourage hoarders, then enact purchasing limits: limit 1 per person.
But I noticed you didn't even attempt to engage with the solution of enforcing purchasing quotas instead of allowing price gouging.
Pricing (including gouging) may be imperfect, but it is better than central resource allocation, price fixing, etc. at leading to efficient allocation of resources.
Others with lower means, you meant?
Pricing (which includes 'gouging') is not perfect, but it's better than central planning, price fixing, and quotas at efficient allocation of resources. At the very least it provides a 'wisdom of the crowds' affect where anyone with enough money can reallocate some of the resources to a location of need that might lack visibility to the hand full of people that would hypothetically be centrally planning all the resource allocation.
I just wanted to clarify that when you said higher prices discourage those with lower needs, what you really meant is that it discourages those with lower means-weighted-needs. Which is to say, it discourages the desperate-but-poor, rebalancing demand toward the less-desperate-but-more-wealthy.
Pricing spreads the capability of resource allocation around. In the central planning model the poor desperate person is reliant on a tiny group of central planners to allocate them some resources, and the central planners may not see that particular poor/desperate group. With the pricing model, anyone with the means can allocate resources where they see a need. In both scenarios the poor are reliant on someone else to allocate them resources. In the pricing model, the poor person has a better chance of being seen by at least someone with the means to make it happen.
https://www.amazon.com/Basic-Economics-Fifth-Common-Economy/...
If people shouldn't profit off disaster, why profit from any misfortune?
What kind of smile is there when there is nothing to buy at any price?
Before all these laws, in natural disasters there used to be marginal producers (people with a pickup truck etc) who would load up on some supplies like ice etc. and bring them to the area that was hit to make a quick profit. When the electricity is out and someone wants $12 a bag for ice it would anger you if you just want to keep your drinks cold, but you would think it is a bargain if that way you can keep your insulin chilled.
https://www.econlib.org/library/Columns/y2007/Mungergouging....
The article I linked too was the personal experience of an economist who was in Raleigh after a hurricane hit the area. As he writes:
>...The problem for Raleigh residents was all about price, at that point. The prices of all the necessities that I wanted to use to “preserve, protect, or sustain” my own life shot up to infinity. Within a day after the storm, there were no generators, ice, or chain saws to be had, none. But that means that anyone who brought these commodities into the crippled city, and charged less than infinity, would be doing us a service.
There were not tons of people bringing supplies into the city. The state had to actually beg other states and the federal government for supplies.
In the long run, high profits during a shortage also mean that suppliers in general will be incentivized to keep a larger stockpile of things that have a good shelf-life since they know they will be able to make good money the next time there is a shortage (more than the storage costs). If you are going to literally make it illegal to try this, then you better have a government be willing to spend its tax dollars on creating a stockpile rather than spending money on more immediate things that are more likely to get votes. (We've now seen that all the talk of the national stockpile the federal government supposedly had was greatly exaggerated.)
For these reasons, a majority of economists are opposed to 'price gouging' laws. For example see http://www.igmchicago.org/surveys/price-gouging/
In the hypothetical, you have no idea whose life is more at risk. And the central planners who want to implement price fixing, purchasing quotas, etc. do not have much if any more insight than you.
A _manufacturer_ charging more is not _front-running_.