Hacker News Reader

It seems to me like most of the (alleged) benefits of scalpers would be equally well achieved by selling (some fraction of) the items in auctions, instead of just picking a price.

However, my impression is that consumers would view this in a negative light, and that the harms to the seller’s reputation would be enough to outweigh the initially increased income. This seems to be the source of the inefficiencies that scalpers exploit/address.

This leads me to an idea which, I don’t believe is typically done, but which I don’t know why not: Why wouldn’t a company just, list a price that they are “going to sell it at”, and then “sell” a large proportion of them at that price to an entity which isn’t publicly connected to the company, and then that organization sells the items via auction (and returns a large proportion of the profits back to the company).

While on the one hand, I don’t see how I’d be able to tell if this was what was done, and therefore don’t see how to confirm that this isn’t what is being done in the cases where there are scalpers, I don’t think this is being done, and don’t know why.

I and many other gamers have a negative view of Nvidia because of their inability to thwart scalpers and crypto miners. To quote a wise man, "so Nvidia, fuck you!"

Ok, but like, would their overall reputation be higher if they were to directly put some proportion of their inventory up for auction (like, each item individually, not like one auction for a bundle of a very large number of GPUs) instead?

No, the prices will still be comparable to scalper prices, and the cost-conscious consumer market will remember the company's price gouging when they make their next-generation purchase

This response was initially confusing to me, but thinking about it, I think it led me to realize that complaints about things like this are, essentially, an attempt at coordination among consumers, in order to collectively get a better deal.

If there were only a single consumer, a monopsony, they would have a large degree of influence on the price.

Building a public consensus on what prices are reasonable and what prices are "too high" allows for exerting similar pressures on the price, as if there were an organization which represented a large portion of the consumers and which would make a single decision for all of that portion (like, a purchasing union thing).

I hadn't realized this.

No, but at least they are being enriched to invest in research and development instead of some arbitraging trolls that will spend it on hookers and blow.

It's not really NVidia's fault. The problem is that you can buy a GPU for $1000 and use it to print $2000 of money. That's annoying because most people just want to play a computer game, not print $2000 worth of money.

The other thing NVidia could do is keep all their GPUs for themselves and mine crypto.

> The other thing NVidia could do is keep all their GPUs for themselves and mine crypto.

Who says they are not already doing that in some capacity?

That sounds like a lot of work, and a PR nightmare if the public ever found out.

Nvidia is already a money printing machine, and their margins are growing. I doubt it’s worth the time investment and risk exposure to the crypto markets for Nvidia. Better off using that time a money inventing better money printers.

Why would you start digging for gold if you are already becoming rich producing and selling the shovels?

I guess it's easier to make a shovel than it is to make a GPU, and it's easier to do industrial-scale crypto mining for a company that already owns a datacenter than it is to build an industrial earth processing operation. If NVidia wanted to mine a lot of coins, they no doubt have a few employees that could get that started. But it doesn't seem like they want to, perhaps because it's not a sustainable business or perhaps because their customers are already mad at them and they don't want to make it worse. (Though it's not really their fault that customers are mad at them; they're actually mad that someone invented cryptocurrency, which is not NVidia's fault.)

> This leads me to an idea which, I don’t believe is typically done, but which I don’t know why not: Why wouldn’t a company just, list a price that they are “going to sell it at”, and then “sell” a large proportion of them at that price to an entity which isn’t publicly connected to the company, and then that organization sells the items via auction (and returns a large proportion of the profits back to the company).

That's often how a lot of today's "scalping" is done - AIUI a lot of "secondary market" tickets on StubHub etc. are sold by an entity that's owned by TicketHub or whoever, so that the artists can sell their tickets at the price the market will bear but put a low face price on them for the sake of their reputation.

This is exactly how concert ticket scalpers work. Bands/producers covertly but with full awareness sell most of the ticket to scalpers, which outsources the reputation hit.

My mother told me about some new anti-scalper scheme she encountered recently when she was looking at ordering concert tickets for herself and my father. It went something like this:

- basket size limited to IIRC a maximum of five tickets for the same concert,

- name of the buyer is linked to (idk, maybe even printed on) the tickets AND

- the named buyer would have to be there with the group to enter the venue.

I think this would probably be pretty effective in countering that bottom-feeding scum called scalper.

You don’t seem to have caught my point: it is the bands themselves that work with the scalpers. They sell a chunk (often majority) of tickets directly to the scalpers for a price above what they publicly claim to charge. Then, they introduce measures like you describe, to reduce competition from grassroots scalpers, to ensure stable business situation for the anointed scalpers.

This arrangement works great: the reputation hit is very successfully outsourced to what you call “bottom feeding scum”. The band benefits from higher profit than they would otherwise be able to get if they tried to sell all their tickets at the publicly advertised price, which quite apparently is below the market clearing price. Ticket availability is increased: instead of having to fight to book the tickets in 8 seconds after the registration is opened, everyone can buy tickets at their leisure, simply paying more for convenience when they buy from scalpers.

Let me ask you this: for the band you are talking about, despite all the measures you describe, you still could buy tickets on StubHub, no?

Maybe producer can sell some part on auction and donate extra income to some charity?

At least this way parasitic scalpers would not benefit.

(this assumes that charity would be some actual charity, not just existing to transfer money to family of CEO or something similar)

There was a minor controversy nearly a year ago where a MSI subsidiary that was only supposed to get old/refurb stock managed to get new stock of the nvidia 30 series and then proceeded to sell them with inflated pricing. Being charitable I'd say it's likely someone over-enthusiastic at that subsidiary and it blew up in their face, but it doesn't help with them being perceived as fair

Scalpers perform a social service by rationing demand and ensuring availability. They don't eat the whole consumer surplus, rather, they must compete amongst themselves and the price you pay is the amount that makes client N+1 walk away if total supply is N. Some of the buyers will find that close to their margin, but others, for which the product is essential in very valuable (thus socially useful) goods or services, will thank God they have found the supply.

Think about hospitals paying 10 times more for antiseptic and performing surgeries, instead of someone drenching their driveway with that 10$ antiseptic while someone else dies without a needed surgery. By raising the price and pocketing $90, the scalper has prevented resource waste and supplied to the patient and hospital a service worth hundreds of thousands.

If a scalper becomes a monopoly, they can extract a monopoly rent and really bleed everyone dry - but so can a producer in the same situation, so the problem is low competition not intermediaries.

Governments can do this without the inefficiency of the scalpers profits in cases where the need is great.

Also known as a command economy, a staple stalinist recipe.

> Also known as a command economy, a staple stalinist recipe

No. That’s an extreme, just like your idea of what you call a “social service” performed by scalpers.

There’s a middle ground, and it’s certainly possible to regulate a market to mitigate the most pathological consequences of capitalism without Stalinism. In fact, that happens all the time.

Such an idiotic statement. When every other country was suffering under scalpers buying up mask supplies at the beginning of the pandemic Taiwan, South Korea and some other countries actively took a hand in mask distribution. The result:

- cheaper access to masks for the general population

- no mask shortages in critical infrastructure such as hospitals or other health care institutions

- general better handling and health outcomes during the pandemic

Leave it to the Americans that would consider sound policy and good health outcomes stalinist or communist recipes.

Exactly there’s a “guilty by association” fallacy here.

1. You want the government to control production of some resources.

2. Stalin controlled production of some resources

3. Stalin killed millions of people

4. Therefore, you want to kill millions of people

No, there is only "knowing that communist central planning always ends up in shortages".

See here https://news.ycombinator.com/item?id=19970544 for an example that illustrates the point nicely.

"Some central planning" does not mean "communism".

On top of that the US and Germany had the same ability, it just that they were extremely slow in their decision making.

When they finally made that step it did help. Incompetence caused scalpers to rise and profit while the rest suffered until the Government finally got their heads out of their asses.

Nothing about stalinism or communism in here. Just general incompetence.

When did people start dousing their driveways in antiseptic?

People do all kind of weird shit especially under stress during pandemic. Tons of richer people who are not scalpers bought ventilators for instance. And this is very expensive medical equipment which is completely useless without team of specialists to operate.

So people bought ventilators completely useless for them make supply shortages on them much worse. And unlike scalpers these people who do something like that due to panic are unlikely to sell them back to market when they're most needed.

> "Scalpers perform a social service"

Good luck finding anyone willing to recognize this absurd point.

> "the problem is low competition"

Tell that to the GPU market.

I've noticed a new wave of neo-capitalists who seem to be actively sympathising with (if not encouraging) scalping. "It's just the way the free market works!" "That's how retailers always worked!" "It levels out demand!".

Such grubby people.

In basically all my hobbies, scalping has become the norm now. Computers, Japanese cars, tabletop games, hell even kids toys. It does feel like there's been a massive increase in the number of people with enough capital to see a trend and basically buy the market out with the intention of making a profit.

So what's your solution? If there is limited number of 3090 GPUs should they be allocated to those who order them first? By random? Auction?

Scalpers at least ensure you can get it of you really need it (that is willing to pay a lot).

I don't have a solution nor do I think I need to offer one, I just think that people who engage in (and sympathise with) scalping are grubby people.

Let’s say resources are allocated first come first served. What if I could pay someone to camp in front of the store and wait in line for me?

It's not illegal to be an asshole. At least scalpers reveal the true cost of the product.

> Good luck finding anyone willing to recognize this

Indeed, most people are pathologically incapable of performing utilitarian reasoning and have a very hard time with this point. Very unfortunate, because that's what informs most economic policy.

Yes, this is exactly my point, thanks for putting it that way.

You disagree but with no reasons. You should consider why you hold that belief.

When did I say I disagree?

"[...] "Scalpers perform a social service" [...] absurd point".

Do you mean that you think it's absurd but you don't disagree that scalpers perform a social service?

I recognize this "absurd" point.

Right, but most don't. Maybe try and understand what I'm saying.

In a civilized society it is the governments burden and obligation to ensure scarce resources are shared responsibly. When this process is disrupted and not quickly remedied you will inevitably discover that people take matters into their hands to get what they need. They might commit white collar crimes or engage in destructive or violent robberies and protests. They might also roll out the guillotines and collect some scalps to remind society at large that the most dangerous people are those who’ve had everything robbed of them. When entire regions and communities are allowed to reach this point war is almost inevitable.

The government is often the cause of scarcity.

If price sky rocket, investors will increases production until prices are lower.

Government can mess with this by limit prices causing investors to stay away, meaning fewer chips get built, thus ensuing a temporary problem gets worse.

You can't increase production of semiconductors within 3-4 years.

Those assembly lines are highly specialized and extremely efficient. After all this time, the best they can do is 1% extra efficiency per month.

And factories were big and owned by the evil rich, so Russia socialized them. Thus leading to decades long shortages for all but the very rich.

A short term (1-5) year problem is no reason to takes steps to ensure a generational problem.

Free market is brutal about improving efficiency and growing with demand.

Absolutely not. “Sharing resources” doesn’t work when there is not enough to share.

A civilized society works when supply and demand intersection determines the price of goods and services.

Governments should interfere for specific cases (life emergency, masks, etc) and there are laws prohibiting scalping for these commodities - rightfully so.

Your idea of government intervention would assume that government is a rational entity. The truth couldn’t be further from it. Bribes and political favors from large companies would leave everything worse than it was before.

Imagine you're a low volume medical instrument maker and you need a dozen STM32 chips for your life saving device. Scalpers make sure that these chips are available and ready to ship, albeit at a premium which the company is happy to pay for given the circumstances.

Laws prohibiting "scalping" or "price gouging" in emergencies often makes problems worse by incentivizing hoarding and disincentivizing more suppliers from entering the market.

Price gouging laws target the products with most serious risk of shortages and guarantee shortages. I think back to the gas pipeline shutdown earlier this year, and how simply that could have been a non-issue if stations had been allowed to raise prices.

The problem is one of optics - if life-essentials were allowed to be price-gouged, the local gov't officials get blamed for not instituting price control during the period of shortage. Even if the shortage would've been worse had there been price control!

I think that everyone I've met with this viewpoint has been an "intermediary" or one who profits from them.

Your thoughts on that?

You're probably doing a bad job of inviting people to share their actual opinions with you. The easy & practical choices here are:

1) People with more money to spend get first pick of stuff.

2) Lottery / people who get to the store-front first.

Both of those are legitimate, although #1 does have a lot of support and theoretical backing in practice. Most of the third ways that get tried devolve back into one of those 2.

Your describing a capitalist dystopia where people with capital can buy up commodities on the cheap and then resell it for 200~900% markup. No thanks I rather not want to life in such a dystopia.

> Scalpers perform a social service by rationing demand and ensuring availability.

While the fundamental issue is indeed price discovery, even in the most abstract market -- stocks/fx/derivatives there are numerous regulations in place to limit the predatory behavior of certain speculators.

It is astonishing we have no such regulation for real-life items.

Scalpers are compounding a problem, by reselling something at 5X the price they invite others to do the same, they create artificial demand and speculation.

> Think about hospitals paying 10 times more

No, think somali pirates in terms of transportation costs. If you only look at it throught the autistic-economical lens, they are entrepreneurs helping the market find the right price for transportation.

> the problem is low competition not intermediaries

The problem is inelastic markets and high moats. Think New York real estate market where mobsters around the world inflate property price and will destroy the local economy.

Think about drug cartels and drug prices.

Think about the USD and its status as a global currency and its relationship to the Military Industrial Complex.

> It is astonishing we have no such regulation for real-life items.

We have something close for emergency situations. It’s illegal to price gouge during something like the aftermath of a hurricane.

It’s a well intentioned law. But for some things, it really may be best to let market forces dictate. For example, generators are in high demand and short supply during a hurricane. Folks snap them up so they can play Nintendo. Because they’re inexpensive due to gouging laws, they sell out fast. Now, someone who actually needs that generator for important, possibly life-saving work is SOL. And there isn’t a price incentive to expedite bringing in more supply.

Edit: I still think the scalpers are scumbags. Just wanted to point out an argument I found compelling in the past.

You don’t need to apologise! It is sad that people don’t get this simple mechanism. I believe that lots of misery could have been averted if market signals where not distorted when they are needed most. E.g. in your example higher prices for generatora would not only prevent people from buying them for less important things but also open up a location arbitrage opportunity and incentivise to bring generators to the place where they are needed most.

This actually is the idea with truly “free market” thinking, no? The money wasted in a crisis, and the companies killed who would’ve otherwise limped through, is all assumed to be less waste and a better outcome than the alternative we get if we prevent scalpers and/or cap the prices. In this theoretical world, we waste more money when supply runs out too fast, and we get companies that are not as good at competing because they limped through.

The big question economically is whether these assumptions are generally correct. We have evidence in both directions, enough that most people can comfortably stick to their opinions and learned assumptions and political tribes. But is there a way to demonstrate that the money wasted is greater with hoarding/scalping than without, and under what conditions?

Actually the original ‘free’ in free markets meant free from economic rents

Ah, that makes a lot more sense than the generalised freedom I’d assumed.

I really should read Wealth of Nations…

Sure, but that’s not what it means anymore, right? Today’s “free” means no regulation.

Yeah now it means “free to capture economic rent” almost the exact opposite.

> And even if you think that this kind of market culling is fine, I'm not seeing why all that money should go to the first asshole who managed to secure a large loan in time to buy off the entire stock of some good.

Very well said, but I'd go even further -- scalpers know other scalpers will do the same and create artificial shortage so they are actually preying on legitimate customers, so there's an adversarial component to the behavior of scalpers as well.

We rationed toilet paper during the lockdowns and there was a legitimate reason people were hoarding it, but we do nothing about scalpers who have no legitimate reason for their behavior.

In reality the market isn't a zero sum game. And there isn't a fixed supply of resources. In a crisis scalpers ensure that the customers receive critical goods that may otherwise be unavailable at any price. Not having that option could kill a company just as well. All of the profit money doesn't go to the scalper either, the original manufacturer can sell for higher prices, reallocate resources to make what is most profitable and meet the demands of the market. And there are price gouging laws to limit this activity for essential goods in an emergency.

If it is about “being the first” then obviously the pricing by the manufacturer is inefficient. In the end the scalpers you describe just fill in the void that is opened up by the manufacturers not adjusting their prices to the demand.

"No offense, but it sounds like some commie gobbledygook to me." ~Norm Macdonald