Comment by basilgohar | Hacker News Reader

Comment by basilgohar | Hacker News Reader

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Your statement is false. Demand would be met with an increase in supply, satisfying all needs for the product and without the "help" of scalpers who sidestep supply-and-demand by artificially creating scarcity to drive up demand for their own profit. This is no help to anyone but themselves.

If there's a legitimate demand that will be used, then there's a good case for production to be increased to meet such demand, and all parties who need something would have their needs met.

At no point to scalpers make this system more efficient – they just serve to extract a greater profit from consumers and businesses for their own benefit by the aforementioned artificial scarcity that they make. This is also known as cornering the market, a well-known and despised practice that has been frequently used by morally corrupt individuals who sought only to benefit themselves. Nowhere can nor should the argument be made that scalpers help anyone but themselves.

> Demand would be met with an increase in supply, satisfying all needs for the product and without the "help" of scalpers who sidestep supply-and-demand by artificially creating scarcity to drive up demand for their own profit. This is no help to anyone but themselves.

There's no "artificial" demand. Think about it - the "scalper" isn't going to buy something that they can't sell on, they'd just lose money that way. (Maybe some of them make bad judgements - but they'll naturally go out of business in that case).

> If there's a legitimate demand that will be used, then there's a good case for production to be increased to meet such demand, and all parties who need something would have their needs met.

"Scalpers" improve the quality of that signal and make it easier to increase production with confidence.

> This is also known as cornering the market, a well-known and despised practice

Views on true corners are certainly mixed (there's an argument that it punishes dishonest market makers), but in any case it only applies to buying up the whole supply, which no individual "scalper" does or can.

Think about it - the "scalper" isn't going to buy something that they can't sell on, they'd just lose money that way.

The only reason they can sell something on is because they created an artificial scarcity of the thing. If widget X has a well-matched supply and demand, and a scalper decides to buy 10% of widget X, then 10% of the demand is now unmet, some of the buyers go out of business, and the maker of widget X now has 90 something % of their previous market.

> The only reason they can sell something on is because they created an artificial scarcity of the thing. If widget X has a well-matched supply and demand, and a scalper decides to buy 10% of widget X, then 10% of the demand is now unmet, some of the buyers go out of business, and the maker of widget X now has 90 something % of their previous market.

If that happens, then the price drops, and the "scalper" loses money - demand has some elasticity, and a healthy market has some slack in it. Momentum-trading speculation works sometimes, but anyone who uses it as their sole strategy will go bankrupt sooner or later.

> The scalper isn’t going to buy something they can’t sell on

That assumes they have perfect information which they don’t they can only estimate demand. It’s perfectly rational for a scalper to regularly purchase more tickets than they sell due to the kind of markup their looking for. At say 4x they could on average sell 1/2 the tickets while doubling their investment.

And of course that assumes they never run into logistical issues.

1. No one assumes that they have perfect information. No one says this is perfect just better than the other ways to handle these situations!

2. Who do you think will consistently have better information than someone whose sole goal is to sell these tickets?

3. If they are consistently losing money scalping and not selling tickets they won't be a scalper much longer.

4. This is a dynamic process which can account for changing variables regarding supply and demand quickly as opposed to rules and regulations which do not.

5. If they only sell half the tickets at 4x then they could sell the last half at an extreme discount and make even more than double their investment! Do you think they would rather make more money or less?

For 5. consider the diamond industry as a real world example of an industry well renowned for aggressively limiting supply.

Scarcity can drive price upwards in an exponential way that ends up making it optimal to not sell all inventory. Sure in an ideal world you would sell everything you can for the maximum price but in the real world the buyer is incentivized to wait until you offer your minimal price.

> It’s perfectly rational for a scalper to regularly purchase more tickets than they sell due to the kind of markup their looking for. At say 4x they could on average sell 1/2 the tickets while doubling their investment.

True, but in that case they've added more value than they've subtracted. That artists insist on pricing every concert to sell out is a big part of the problem here; you'd get a more functional market by accepting a few empty seats to give some slack.

Bands want to present the appearance of a successful band, it helps their image. A filled stadium is part of that, so yes they can make more money today by raising prices but that’s making real trade offs.

Except increase in supply in chips takes 3-5 years

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