http://pandodaily.com/2012/10/31/assholes-shrug/
http://pandodaily.com/2012/10/17/whos-the-real-bully-uber-or... [written by Nathaniel]
http://pandodaily.com/2012/10/24/travis-shrugged/
http://pandodaily.com/2012/11/02/a-final-word-on-uber-and-th...
http://pandodaily.com/2012/12/04/shock-uber-scores-victory-a...
http://pandodaily.com/2012/12/13/what-a-difference-six-month...
Price "gouging" is actually a public service, it LITERALLY SAVES LIVES. It ensures that needed materials find their way to the people that need them the most. If I'm reasonably well stocked on batteries, and a business isn't allowed to raise prices during a hurricane, I have no dis-incentive from clearing off the shelf and buying all of them. However if the prices get jacked up, I won't buy them if I don't need them. It also provides an incentive and encourages people to be well prepared.
http://mises.org/daily/1593/Price-Gouging-Saves-Lives-in-a-H...
Seriously? The lower income people living on Staten Island during Sandy would like a word with you. Price gouging ensures that things are only available to people with excess income to absorb the gouged price.
The whole point about price gouging during Sandy is that it was an exceptional event, and maybe not one we should leave to market forces. If every grocery store tripled the price of bottled water and essential supplies then many people would be unable to afford them and starve. How is that a good thing?
It would also mean that smart entrepreneurs would pre-stage needed supplies in anticipation of the price increase. With strong 'gouging' laws, there is no incentive to spend money on preparing the supply chain or in spending more money to overcome supply difficulties (i.e diverting supplies from elsewhere, rushing delivery, etc)
Price 'gouging' contains the seed of its own destruction because it encourages over-supply and subsequently lower prices.
In natural disaster scenarios, this is likely impossible as delivery infrastructure usually goes down for some period of time. This is why price gouging is successful for the businesses raising prices in first place.
> It would also mean that smart entrepreneurs would pre-stage needed supplies in anticipation of the price increase.
Businesses do not do a good job of stockpiling resources for exceptional events that happen once in many years and many businesses view this as a cost that is not worth paying.
> With strong 'gouging' laws, there is no incentive to spend money on preparing the supply chain or in spending more money to overcome supply difficulties (i.e diverting supplies from elsewhere, rushing delivery, etc)
There is no incentive in general since there is an very low probability that work on on delivery and supply channels will actually pay off as it is a low probability that a disaster scenario will happen in the first place.
> With strong 'gouging' laws, there is no incentive to spend money on preparing the supply chain or in spending more money to overcome supply difficulties (i.e diverting supplies from elsewhere, rushing delivery, etc)
Most historical examples of price gouging never worked out this way. On a logic basis, this doesn't make sense as the point of price gouging is to maximize revenue from sale during a short window of time while new supplies and materials cannot make it to the area where you are selling the now highly priced goods.
If you attempt to legislate the rules regarding price you are making it illegal to respond to the signal. This just leads to oversupply and legally enforced profit (the price is too high) or shortages and legislative enforced queues and delays (the price is too low).
W.r.t to price gouging, this is the thing that doesn't happen or doesn't happen quickly enough and means people who can't afford the new high price go without. For essentials like food, water, batteries in a no power situation, etc. that is a huge problem.
Smaller events like tornados are much easier to respond to because they are localized.
Price gouging laws negate any sort of systemic planning to take advantage of short-term price spikes. Eliminate the laws and you open up opportunities for creative businesses to plan and respond to these short-term opportunities.
In post hurricane road conditions? You don't live in New York, do you?
If the price of water tripled, a decent section of the population would struggle to afford it. That is the start and end of that debate, as far as I am concerned. I believe in the free market up until it starts starving people.
Let the price float as needed and if you feel like some people are being priced out of the market, give them cash for them to spend as needed. Some people will need water. Other people will need food. Some folks will have both and instead will spend the money on gas for their generator.
Emergency cash assistance is a much better way to assist those in need and ensure that the market will rapidly adjust to provide resources in the right quantity and right location (due the the pricing signals).
You mean "According to my preferred economic ideology if every store tripled the price of bottled water you should have ...", because it's fairly easy to check the historical records and see that this is definitely not what actually happens.
But by all means, don't let facts get in the way of your faith.
You are either trolling or economically ignorant.
Disrupted supply lines mean higher cost to deliver materials (longer routes, special equipment, etc). Higher prices encourages suppliers to expend the extra $$$ to deliver the goods. Or even new suppliers to enter the market (for example think about construction workers or tree removal companies in the wake of a large storm traveling to where the work is).
If the price can't change (legally) then suppliers will simply ignore the problem until conditions return to 'normal' thus ensuring shortages.
Me: we're talking about "price gouging" during disasters or some other event that disrupts normal supply lines
Seems pretty clear what I was talking about. Your hypothesis about price gouging during emergencies doesn't have historical evidence.
I understand perfectly why you think it should work that way according to your ideology. I was pointing out that, in these circumstances, it doesn't match up with the data.
Plenty of other commenters, with knowledge of inventory logistics, have explained why.
If that situation had persisted it would actually be one of the rare situations where rationing makes sense- and that rationing would logically be controlled by the government. Which makes all the free market Rand-ians foam at the mouth- despite the fact that it makes sense.
On the other hand, I just finished my freshman year in economics, and when we draw a dotted line across the X of supply/demand, then there's this little triangle see? Shade it in. Yeah. So anyways that's what happened. BTW, there's no axis for "natural disaster" on my graph so clearly that's irrelevant. I don't know why you're bringing up red herrings.
It becomes a public policy issue (we have too few and how to apportion in the short term) rather than an economic issue.
During Sandy, much of the price 'gouging' discussion was regarding gas supplies. The effect of price gouging laws was that people who had time waited in line and then sold their tank of gas on the secondary market where the price gouging law was not followed.
It is really hard to make the laws of supply and demand obey legislative commands.
Where did you get that stark either-or proposition from?
I think people either don't realize, or at least haven't properly internalized, the fact that Uber doesn't employ drivers directly, but just connects drivers and riders and manages payment.
If Uber employed drivers directly, then complaining about high fares during a hurricane would make sense. It would be reasonable to say that they should just keep fares the same, put a lot of drivers out there, and maybe take a loss for the good of the community. I don't know if I'd be comfortable saying that they should, but I can understand the point of view, at least.
But with Uber simply acting as an intermediary, they have no direct control over drivers. If they want more drivers out there, they need to offer an incentive.