
$5000 per violation of price-gouging in CA - quizme2000
https://www.caloes.ca.gov/cal-oes-divisions/legal-affairs/price-gouging
======
EdgarVerona
A lot of people in this thread are willfully ignoring some basic facts here.
These products _are_ being made in sufficient quantity for everyone. There is
_not_ a significant decrease in production. There _is_ a significant increase
in hoarding, and in many cases it is for the explicit purpose of creating
artificial scarcity to increase the price of a product.

This is not a case of toilet paper suddenly costing more to produce. The price
gouging law is not bringing toilet paper to levels where the _producer_ of the
product is taking some kind of operating loss or even reduction in profit of
any kind. This is a case of consumers attempting to create small niches of
artificial scarcity so that they can profit.

The free market arguments being made here are baffling, and willfully ignoring
the aforementioned truths of this specific set of circumstances that have
driven these specific laws. Have we lost all sense of humanity for the sake of
our ideology?

We would be doing our entire society a severe disservice if our solution to
this problem is simply "create so much toilet paper that people can't hoard
it." The fuck are we going to do with that much toilet paper.

~~~
rahimnathwani
"There is a significant increase in hoarding, and in many cases it is for the
explicit purpose of creating artificial scarcity to increase the price of a
product."

People hoarding aren't trying to _create_ artificial scarcity. They are buying
because they _anticipate_ scarcity, and want to either (i) be prepared, or
(ii) profit from resale.

Hoarding has caused shortages which, in turn, justify the original hoarding.
This is a sad situation, but capping prices isn't a solution. If anything, I
would expect higher prices would discourage hoarding, resulting in a more even
allocation of TP/whatever between people.

~~~
saghm
> People hoarding aren't trying to create artificial scarcity. They are buying
> because they anticipate scarcity, and want to either (i) be prepared, or
> (ii) profit from resale

How would (ii) be a profitable activity if buying in bulk wasn't creating
artificial scarcity? I mean, I guess you could argue that the scarcity isn't
"artificial", but like, when someone is literally buying more hand sanitizer
than they could possibly want to actual use themselves, that seems pretty
artificial to me.

~~~
rahimnathwani
It's a profitable activity if there is scarcity in the future, regardless of
whether I can influence that scarcity.

smallnamespace's made the same point as I made in the portion you quoted, but
made it much more clearly:

"To a very good approximation, the marginal impact of any hoarders on the
scarcity of a product is zero. Hoarders are not trying to drive scarcity
themselves, they are trying to buy a product now because they think the price
will rise, but they're not trying to make the price rise by buying it. The
distinction is important!"

~~~
nate_meurer
Both you and smallnamespace are using the same strawman. Who cares about the
marginal impact of an individual's actions?

The situation in practice is dead simple: widespread hoarding is creating
ongoing shortages of various products, and some of these hoarders are using
that temporary scarcity to profit from other peoples' desperation. This is
entirely predictable and uncomplicated, and it's both ridiculous and
irrelevant to quibble over whether the profiteers are "trying to drive" the
artificial scarcity to which they're contributing. I honestly don't even know
what you're arguing about.

~~~
rahimnathwani
'Who cares about the marginal impact of an individual's actions?'

Someone who is trying to understand their motivation (what they're trying to
do).

'it's both ridiculous and irrelevant to quibble over whether the profiteers
are "trying to drive" the artificial scarcity to which they're contributing'

It's not irrelevant. I responded directly to a claim in the comment to which I
replied. No tangent.

'I honestly don't even know what you're arguing about.'

I'm really interested to know why some folks (not you) are so insistent that
the hoarders/profiteers are trying to create a situation (rig the game) rather
than just being players in it. I thought the logic of my original point was
pretty obvious and, as you say, it's not even that interesting compared with
the wider point about the collective effects of the individual actions. So why
are people so interested in this small point?

------
whatshisface
Price isn't just the cost of buying something, it's the reward for producing
it. If we see too many price gouging laws, then you can expect shortages as
companies find themselves unable to justify extreme measures that would
otherwise increase production (at great expense). Secondly, I would expect
that localities with price gouging laws will discover that their goods are
being re-routed to other places without those laws, exacerbating shortages
further.

~~~
will_walker
This isn’t the companies being punished - it’s the opportunists. These
vultures are driving to every small pharmacy and clearing out all the masks
and sanitizer. Now that Amazon & EBay have cracked down on reseller gouging,
some are sitting on stockpiles through the midst of a pandemic.

* [https://www.nytimes.com./2020/03/14/technology/coronavirus-p...](https://www.nytimes.com./2020/03/14/technology/coronavirus-purell-wipes-amazon-sellers.html?action=click&module=Spotlight&pgtype=Homepage)

~~~
siruncledrew
Yes, for some reason people complaining about the supply-demand economics of
price gouging laws seem to think Clorox, Charmin, Kleenex, etc are the ones
jacking up the prices of supplies...

Manufacturers producing enough quantities to sell is not the issue. The
assholes that swoop in and buy out all the stock in a store temporarily to
quickly turn around and sell the items for much more are doing the gouging.
It's like going to the gas station right after a refill with a big-rig tanker
during a time of high demand, filling up all the gas from the station, and
then sitting next to the now-empty gas station all day and charging people
500% more for gas.

That is why stores are now implementing quantity limits for certain supplies,
so people don't just hoard them for profit and to deny everyone else access to
buying the supplies.

~~~
Scoundreller
> Clorox, Charmin, Kleenex, etc are the ones jacking up the prices of
> supplies...

In a shortage situation, I suspect they dial-up the production of the higher-
margin product lines.

The house-brand manufacturing line won't be the one that gets the extra shifts
or equipment installed.

~~~
obmelvin
Well, I'd much rather buy a particular brand vs store brand than paying some
dick $50 on ebay or amazon.

------
radu_floricica
Prices being elastic is good for people, in a vast majority of cases. It makes
sure things get distributed more or less proportional to need, as opposed to
just random or worse than random.

Case in point: I luckily found some hand gel still for sale online. Probably
the very last one around here. So I stocked up - not resale quantities
(thought it would have been trivial) but definitely more than I needed -
something like 10 pieces. Why? Because the price was low and I'm doubtful I'll
get to see any more this year.

If the price had been even slightly elastic, I wouldn't have bought 10 pcs for
$10 each. I would have probably spent about the same, and gotten 2 or 3. Even
better, I would probably still be able to get it from the groceries store,
without any shortage - and buy just one as needed.

So we have two scenario: if the prices stay the same some people stock up
early, and most are left without. If the prices go up proportionally, we end
up spending a trivial amount more (let's be honest, spending an extra $7 on
hand gel is not a tragedy) but we have no supply problems. First because there
is much less stocking up, and then because everybody is incentivised to
produce and sell more.

~~~
ghshephard
"I'm doubtful I'll get to see any more this year." \- I'll take that action.
All of the consumable that people have been panic buying - toilet paper, hand
gel, etc... have experienced absolutely _zero_ supply shock, and, indeed, most
of the manufacturers are going to be delighted to draw down their inventory
and get a boost this quarter. I'll be extraordinarily surprised if shelves
aren't completely full of those consumable within 7-10 days.

People are strange - the fact that there was a global pandemic coming at us
was pretty obvious as of early march, but it was _this_ weekend that everyone
decided to panic? It's not as though this were a hurricane that just landed on
us by surprise.

I fully support the price gouging laws - it discourages these yahoo's from
buying up all of the supplies and sticking it in their garage and depriving
people over the weekend who might need a container.

~~~
sneak
> _I 'll be extraordinarily surprised if shelves aren't completely full of
> those consumable within 7-10 days._

Then why do we need any price-gouging laws? Who is harmed without them, if the
supply remains intact?

~~~
georgemcbay
People with short term need?

7-10 days is a long time to go without some things like food, cleaning
supplies (particularly in time of pandemic), masks for those who actually need
them like healthcare workers on the front lines, etc.

~~~
gwright
Have you noticed that the shelves are empty? The price gouging laws don't help
that situation they _create_ that situation. How are empty shelves better than
the items available for 2x, 3x or even 5x the regular price for a short period
of time?

~~~
ghshephard
People who price gouge are highly incentivized to go buy all the stock in a
community and resell it on the internet. That guy in the NYT article
essentially drove to all these out of the way places and cleaned out their
stock.

Allowing price gouging would not result in more of that stock being available
on the shelves - responsible retailers and distributors know better, and
behave better than that - they make all of their available stock, and when
they run out - they run their factories at 100% to try and catch up.

Note - I have _zero_ issue with ticket scalping - love the fact that there is
a free market where people can buy and sell tickets at the price the market
can bear. Also have zero issue with a free market in general - it encourages
new suppliers to come in when prices go up, and consumers to find relative
substitutes - things find an equilibrium.

What I have a problem with is people taking advantage of an emergency or
shortage, in such a way that _further increases_ the shortage of items that
are critical to people's health and well being, people who may not be able to
afford to go out an pay 10x prices on amazon for something like a mask or hand
cleaner.

------
pascalxus
The crazy thing here is that they go after these gougers so aggressively for
just selling a 20$ bottle of soap. And yet, predatory hospitals in the US can
do x1000 times worse and not even get a slap on the hand. Hospitals are the #1
cause of bankrupcy in the US.

~~~
techslave
they aren’t gouging. gouging is a reaction to a disaster or event of some
sort. hospitals always charge the absurd prices.

~~~
loeg
So if Arnold Arbitrage changes his name to Henry Hospital and always charges a
high markup, that's A-Ok with you? This point of view seems inconsistent.

------
anikan_vader
From an economics stand point, I don't understand why the government should
ban price-gouging. Doesn't this place an artificial price ceiling that will
ensure a shortage of goods? I would personally rather stores have items such
as food/water at marked-up prices than not at all.

~~~
nostrademons
From a political standpoint, I see the point. Price gouging makes people
extremely mad, and it redirects goods from poor people to wealthy people. When
tempers are already fraying and maintaining social order is already difficult
because of an emergency, the last thing a government needs is a nucleus for
lots of pissed-off people to rally around.

Remember that the first priority of any government is to keep itself in power.
Governments that don't accomplish this are no longer governments. Efficiently
allocating goods is a secondary consideration that helps them achieve this,
but if doing so means they end up with a revolution or rebellion anyway, it
wasn't very effective.

~~~
dmix
Pictures of empty shelves on social media is causing panic and driving more
shortages. This is a lose-lose situation for gov interference. This sort of
punitive response will always be far too late or too little to be effective
anyway.

The markets will respond far faster with supply than setting price ceilings
and fining random opportunists will.

So few people question whether it will actually work in the real world before
asking if in an ideal scenario it is an effective idea.

I mean what’s going to happen next time? Are they going to lock up all the TP
and ration it out on first signs of any sort of epidemic or other causes or
panic? Because that’s when the hoarders and grey market guys were already
stocking up.

~~~
nostrademons
The point is to serve as a disincentive to ordinary people thinking "Oh, I can
make a lot of money doing that."

It crossed my mind, when news of the coronavirus first broke, that I could
make a lot of money speculating in toilet paper, canned goods, rice, and beans
in the near future. (I did all my prep shopping 3 weeks ago, but didn't buy
more than we personally needed as a family.) I didn't because a.) a little
voice in my head said "Do you really want to be that asshole?" and b.) it
occurred to me that it was very likely that powers that be (governments and
market platforms like Amazon) were going to crack down very hard on scalpers,
and it was not worth going to jail for. Turns out I was right about that -
people are not going to jail (in the U.S. at least, I heard they may be in
Europe), but they're facing $5000 fines per item or eating the cost of buying
& disposing of the items because Amazon revoked their seller license.

The point of highlighting laws like this is so that people aren't tempted
_next_ time there's emergency to do the same thing.

------
avip
Reading this thread is the official confirmation that Americans are out of
their mind.

~~~
newbie578
Absolutely, I cannot fathom how people are so anti-government that they cannot
see the forest from the tree.

These types of situations are textbook explanations for WAR PROFITEERING
(except we are in a crisis instead of war).

~~~
amiga_500
It's because the default mindset is that everyone is horrible and motivated
solely by profit.

~~~
justinmeiners
That's a bit of and extreme characterization of "tend to look out for the well
being of your family/people you care about"

So who's model accounts for hoarding behaviors like this?

------
jeffdavis
For basic goods like toilet paper, production hasn't fallen, and consumption
hasn't risen. Distribution is still adequate for the amount of production and
distribution, so it's not directly the problem, either.

The problem is buffering. Normally, buffering happens within the supply chain
-- the back rooms of stores, loaded in trucks, warehouses, distribution
centers, and the factories themselves. Now, we are telling everyone "buffer at
home so you don't need to go out so much". But the problem is, buffering is
much less efficient at the end of the chain, so you need to buffer a lot more.
That's causing a short-term strain on production and distribution.

Blaming selfishness or gouging probably doesn't do much to help this problem.
My guess is that the biggest problem is the discrepancy between how much stuff
would be needed to buffer within the supply chain versus how much stuff is
needed to buffer at the end of the supply chain (i.e. at home).

Worse, because it's a temporary buffering problem and there's no real increase
in consumption, there's little incentive for production to increase now to
alleviate it. Any increased production/distribution now just means less demand
later when people start to work through their caches at home (and stop buying
for a while).

So the only way to alleviate this is to allow the prices (that manufacturers
charge) to rise, which will give manufacturers a cushion against the
inevitable slump in the future. That's not very popular and not worth the
brand damage, so it won't happen.

The good news is that I don't think this will last more than another few
weeks. Gougers will stop buying at some point because they don't want to get
stuck with a huge supply of toilet paper and no channels to sell it. And the
home caches will fill up.

EDIT: this analysis has nothing to do with things like facemasks, where
consumption has dramatically risen.

------
epicureanideal
This would seem more fair if they said the price couldn’t be raised by more
than 50% or 100% during an emergency. So toilet paper that was $10 would
become $20. Not a major problem, and yet it gives producers the margins to
keep staff working longer hours to produce more goods.

But no increase over 10%? That gives producers very little margin to work
with. (10% is the rate set in the law. See the link.)

------
justinzollars
Price-gouging would correct the toilet paper hoarding problem.

~~~
bob1029
Allowing prices to directly track available inventory seems like an excellent
approach. The problem will self-correct very quickly as 4-packs of toilet
paper begin to exceed $20. As inventory is replenished, prices could begin to
drop again.

Yes - this sucks for someone who really wanted toilet paper that day, but at
the same time it ensures more conscientious spending where absolutely
required. I usually don't check prices when I shop for groceries, but if TP
was $20 per roll id probably actively decide to not buy any that day. Having
this kind of damping from a price-demand perspective could really help to
stabilize the availability of goods in retail environments. I can understand
how customers might not like this, but if situations are dire, I think we
should consider at least being able to throw some sort of switch to enable
this mode of operation during emergencies.

~~~
kevingadd
"actively decide not to buy any that day" and not wipe your rear end after
using the toilet? If you're out of paper towels or soap and the cost is 50x
the usual you're just gonna not wash your hands? Think through the
consequences here. Not everyone can afford to stockpile stuff like this in
advance, some people live paycheck-to-paycheck. I've got a couple weeks of
paper products in reserve typically, not 2 months worth - and if the timing is
bad I might be down to a week's supply. Thankfully in this case I restocked
just before things got bad but if this lasts I'll have to deal with shortages
just like everyone else. I'm actually out of hand soap refills...

~~~
Noumenon72
Are you familiar with marginal analysis from economics? This is how markets
work for everything. You are considering the one person with no TP, paper
towels, or soap -- that is the person who will not be dissuaded from buying at
any price. But there is always one person right on the edge of buying at the
current price -- one who has a single roll left and can stretch it, or one who
can just poop at work, or one who grew up wiping with corncobs and always
thought of TP as a luxury anyway.

As the price goes up, those people drop out one by one. It is those marginal
consumers, not the one who needs TP the most, who are price sensitive. This
ensures that the person with no TP, paper towels, or soap is always able to
get the TP that they need _now_. Even if there's only one roll left. The price
may have to rise to $100 a roll to distinguish between them and the next-most-
marginal consumer (who also has no TP, paper towels, or soap, but is willing
to hold their poop for a day to save $100). That's the most efficient outcome
and markets are great at finding it.

------
voodooranger
I highly recommend listening to Duke professor Mike Munger discuss price
gouging on this episode of Econ Talk:

[https://www.econtalk.org/munger-on-price-
gouging/](https://www.econtalk.org/munger-on-price-gouging/)

It’s very entertaining and enlightening.

------
fortran77
I've looked into this (I'm returning to California in two weeks) and you don't
have to had to buy something to have standing to sue. If you see someone
advertising $1.50 masks for $40 apiece on Amazon, for example, you can sue
them in small claims court in CA (if you can find them) and, most likely win,
according to my attorney who helped us with a similar case two years ago:

There's a similar law in California that allows individuals to sue businesses
who offer you a contract that forbids leaving negative feedback on review
sites. We had a garage door company offer us a contract that included such a
provision. We didn't sign it, went to court, and quickly got a judgement for
$2,500, which they paid.

(Here's information on that law:)

[https://racohenlawfirm.com/fines-for-trying-to-stop-bad-
onli...](https://racohenlawfirm.com/fines-for-trying-to-stop-bad-online-
reviews-californias-new-yelp-law/)

------
rickyc091
I'm noticing with Amazon/eBay shut down people have moved to craigslist and
alternative resell markets. I see some listings where people are genuinely
trying to help (4oz hand sanitizer, two 2oz bottles, alcohol pads, moist
wipes) for $20, but these will probably be quickly bought and resold at a
premium.

------
leptoniscool
In a free-market, sellers and buyers will find an equilibrium price at which
goods can be exchanged for money. When an outsider such as a government
artificially sets the price (or forces the price to stay constant), there will
be shortages or overproduction.

~~~
rtkwe
Stores and manufacturers aren't actually charging increased prices in the
majority of cases here. It's people buying out those stores and selling. If
manufacturers don't see the increased prices the Econ 101 logic breaks down.

~~~
gwright
They should be charging increased prices. They should have charged increased
prices the moment demand went up (like Uber surge pricing). That would have
snuffed out the speculators right quick.

One reason they don't do this is because of the attitudes illustrated in the
comments here. People irrationally believe that surge pricing in this case is
wrong and the negative response by their customers outweighs the benefits of
surge pricing. I believe that _attitude_ about surge pricing is wrong and it
is one reason why we end up with shortages. It is a terribly self-defeating
attitude that exacerbates the situation.

~~~
salawat
They should absolutely not have raised prices.

The issue isn't manufacturers, and only retailers in that they failed to
implement a purchase limit per customer given news of a pandemic.

You want the maximum number of people with enough supply to get by. Not to
have large swathes of the population to go without because someone decided to
usurp the logistics network in search of price gouging opportunities.

~~~
gwright
Purchase limit per customer? So a single person and a family of four and a
family of six are subject to the same limit?

Much easier to raise the price then ask people to prove their need for a
product.

And how are you going to prevent people from just having mom, dad, and each
child purchase the items separately?

~~~
salawat
Good!

In order to do that, people will have to get cash. Cash has a far more
tangible effect in terms of inspiring frugal spending, and it may not be a bad
idea to get cash out of "the system" anyway.

If not, simply vet the card making the purchase. This isn't novel or
groundbreaking. Way back when, you'd have a Government issued ration card I
believe. Though I'd think a voluntary program implemented by The practice of
private ledger keeping, while out of vogue, is still quite practicable. All
you have to do is talk to people. Of course, if you went balls to the wall
laying off cashier's, you may be in for a bit of a bad time, but hey,
shareholder haircuts happen. Price of doing business.

This is not even the slightest bit untread territory.

------
seemslegit
Is there any evidence consumers are stocking up to profit rather than just
have enough so as to be able to avoid stores for some time ?

~~~
georgemcbay
Yes, there is evidence, because some of the people engaged in this are dumb
enough to give interviews to major press:

[https://www.nytimes.com/2020/03/14/technology/coronavirus-
pu...](https://www.nytimes.com/2020/03/14/technology/coronavirus-purell-wipes-
amazon-sellers.html)

I'm sure in terms of overall numbers the vast majority of people who are panic
buying aren't doing it to profit, but it only takes a couple of jackasses like
the ones described in the article operating at the scale they did to cause
real problems.

~~~
dragonwriter
The thing is, once people are hoarding for any reason, profit or not, and that
leads to signs of potential supply problems, everyone else has a strong
incentive to stock up defensively, not for profit or defense against the
original disaster, but to prevent being adversely effected by the supply
shortages caused by hoarding. Which then creates a positive feedback loop of
incentives unless external controls (rationing) are imposed.

------
robomartin
From the law:

“However, a greater price increase is not unlawful if that person can prove
that the increase in price was directly attributable to additional costs
imposed on it by the supplier of the goods, or directly attributable to
additional costs for labor or materials used to provide the services, during
the state of emergency or local emergency, and the price is no more than 10
percent greater than the total of the cost to the seller plus the markup
customarily applied by the seller for that good or service in the usual course
of business immediately prior to the onset of the state of emergency or local
emergency.”

I am glad they included this language, even though it is a bit sloppy. What I
am referring to is that yes, costs can increase dramatically during an
emergency, however, the “markup customarily applied” could also change in
dramatic ways.

One of the aspects of the theory of pricing is to include in the equation
variables to address support, business continuity, expansion, disruptions and
other “nonlinear” factors.

In an emergency what might have been simple could become complex. This means
it might be impossible for a vendor to maintain an ongoing supply or continue
to offer services. And, given the current reality, if the consequence of
providing the goods or services could be loosing your entire staff to a
quarantine, your ability to maintain a supply might require a very different
approach to pricing.

Given the severe consequences, this language could cause vendors to avoid
exposure for fear of being destroyed by an uninformed claim. Which means
supply would contract and prices would explode.

That said, the guy buying water at Walmart for $1 to then sell it for $5
should get nailed to the wall with rusty nails.

------
Mountain_Skies
How often does anyone get charged for this other than a few token made to be
an example for the most egregious behavior? Price gouging laws seems to be
mostly a threat rather than an actual attempt at regulating pricing. It's
similar to how the police will arrest huge numbers of people during a protest
and then drop the charges against almost all of them the next day. The
backbone of the protest had been broken so it no longer mattered if they swept
up a bunch of bystanders with protestors and rioters as they're all let go. I
wonder how well any of these gouging laws would stand up in court if the state
didn't quickly drop charges when challenged.

~~~
Noumenon72
Yes, this law would make more sense as a norm to shame people from hoarding
than as a strictly enforced market restriction.

------
magnusss
Come on, guys. Hoarding a commodity in order to corner a market and thereby
profiteer is immoral, (often) illegal, and a distortion of the free market.
It’s bad behavior. Please stop.

~~~
grecy
I agree that it's immoral, but I do have to wonder if there's much difference
between what these people are doing vs Nike making a pair of shoes for $2 then
selling them for $400, or hospitals in America marking stuff up 500 or 1000%.

By definition capitalism is about making a profit. Sell things for as much as
you can, and win.

I find it fascinating how where there isn't a "crisis" then maximizing profit
is just what we're all supposed to be doing, and we accept it but somehow in a
"crisis" it's suddenly evil and horrible.

Suddenly capitalism itself starts to feel mighty immoral, doesn't it?

~~~
magnusss
Or selling software with 0 marginal cost for $40k? :-)

As with all moral issues, it is difficult to come up with an objective
distinction between wrong and right. I tend to rely on Kant’s categorical
imperative: Would society be harmed if everyone behaved in this way? In our
situation where hoarders are attempting to profit from a crisis, I believe the
answer is clear: It’s immoral.

~~~
grecy
> _I tend to rely on Kant’s categorical imperative: Would society be harmed if
> everyone behaved in this way?_

Hospitals in the USA marking stuff up 500 or 1000% ARE harming society
already.

If all shoe companies charged $400 for a $2 shoe, I believe society would be
harmed, yes.

If every company hired people as part time only so they didn't have to pay
benefits, again, society would be harmed.

The list goes on. Capitalism is already harming society badly.

~~~
magnusss
> Hospitals in the USA marking stuff up 500 or 1000% ARE harming society
> already.

Agreed, that needs to be fixed.

> If all shoe companies charged $400 for a $2 shoe, I believe society would be
> harmed, yes.

A competitor would step in, charge less, and win the business. It would only
be immoral if competition was quashed or impossible, such as in a hoarding
situation.

> If every company hired people as part time only so they didn't have to pay
> benefits, again, society would be harmed.

I don’t see why this is true. The only benefit of moral significance is
medical, and there’s no law of the universe that states that must be paid by
an employer.

~~~
grecy
> _I don’t see why this is true. The only benefit of moral significance is
> medical, and there’s no law of the universe that states that must be paid by
> an employer._

Most developed countries consider maternity leave, sick leave and
compassionate leave (carer's leave) basic rights.

------
pascalxus
So, on the one hand, people react with aghast to find out that a bottle of
Purrel soap costs 20$, when it actually should cost 2$ to produce.

But, here in CA, on the other hand, when a House (something far more crucial
to people's lives), costs 800,000$ instead of 200,000$, that's okay (at least
with the vast majority of voters).

I should mention the reason for 1 and the other are completely different. The
soap, is merely due to the seller, wehreas the housing shortage is a political
choice voters agreed to.

------
jbverschoor
So what will this do to Uber surge pricing?

------
yyy888sss
The current hoarding issues are being addressed in Australia by all
supermarkets, they are rationing key goods ( 1 pack toilet paper, pasta,
handwipes etc per day) but keeping prices low. You can deal with rapid demand
increases for essential goods this way.

------
sxyuan
I see some commenters saying that preventing price gouging will take away the
incentive to produce more of a certain good when the demand increases. This
doesn't make sense to me.

If, under normal market conditions, producers already make X amount (of , say,
toilet paper) due to Y demand at price Z, when the demand spikes to 2Y, if you
can produce and sell 2X goods at the same unit cost, you can double your
profit without raising the price at all.

One might argue that in order to rapidly increase production capacity, the
unit cost will rise as well. But that doesn't necessarily mean that you have
to allow prices to rise. As long as the extra investment allows you to produce
and sell enough units so that the extra profit is greater than your cost, the
incentive is still there. And that's ignoring the fact that a price cap
doesn't have to fix the price at current levels - it can limit the increase to
a reasonable amount.

~~~
aeternum
Most suppliers cannot simply produce 2Y the goods at the same price. Switching
lines involves retooling and, risk, and/or overtime, all of which are
expensive.

If that switch can be done for under the price cap, then the price should
remain under the price cap anyway due to competition. If it cannot, then
shortages will result.

------
mindslight
What is everyone experiencing for price gouging / shortages on the west coast?

Even though I stocked up myself, I feel like shortages of food and general
supplies are going to be temporary. The immediate goal is to avoid having to
go back to stores before everybody else figures out the new normal (eg don't
fucking stand there coughing in the middle of the store).

Hand sanitizer/IPA seems easy to produce in industrial quantities, and it
feels like that will sort itself out in a week or two.

Respirators/masks seem the only thing that are and will continue to be in
short supply. But it feels like government (including health providers) is
going to have to get them into everybody's hands eventually. But maybe that's
overly optimistic.

------
randyrand
If I buy all the toilet paper in a store and resell it for 5% more is that
considered price gouging?

What if I sell it to another middle man who also distributes and sells for 5%
more?

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bjourne
It's amazing that it takes a pandemic for people to realize that "free market"
isn't the solution to every problem in the world.

~~~
herbstein
Reading this thread would indicate that some people still don't realize it
now.

------
jmugan
I wish we could apply price-gouging laws to medical care. But I guess it just
seems like normal practice at this point.

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2dvisio
Suddenly in UK groceries became very expensive. Same exact shopping two weeks
ago £50, today £80 :/

------
briandear
An argument supporting gouging: [https://reason.com/2019/01/31/price-gouging-
is-supply-and-de...](https://reason.com/2019/01/31/price-gouging-is-supply-
and-demand-at-wo/)

~~~
logicchains
You'll find a similar argument in any basic econ textbook. Put a cap on
prices, then when demand rises for something (which normally leads to an
increase in price, all other things being equal), the lack of an accompanying
rise in price means there is no incentive to produce more of the good (no
incentive for more producers to enter the market), so there isn't a
corresponding increase in supply.

Might work okay in China, where the government can e.g. command factories to
switch to producing masks, but it means American factory owners won't have any
incentive to switch over to producing them.

~~~
XorNot
And like most things, basic econ is not the be all and end all of how the
world works otherwise we wouldn't have those all-important second year econ
classes.

Price gouging is _not_ an efficient market result for anyone - the goods
aren't actually, in real terms, worth the temporary price (the costs of
manufacturer's switching over production is going to wind up much higher then
any profit they can make once they're tooled up) nor does their value
represent efficient allocation of resources - the guy with 11,000 bottles of
hand sanitizer has no use for them, outside of the extremely limited window of
people panicking due to uncertainty.

But really, whether anyone believes this can be viewed through a very
different lens: multiple times in the past week, US exchanges have ceased
trading due to automatic circuit breakers from 7% drops in the market. Surely
if the market is all knowing we shouldn't trigger these mechanisms and instead
just let the invisible perfect hand let people sell stocks freely. After all,
if we don't allow sudden plunges, what incentive will there be for investors
to properly allocate their risk in the future?

But, no one's making that argument. Nor is anyone questioning why it was
suddenly urgent that the government put $USD1.5 _trillion_ of liquidity into
the market.

~~~
loeg
> But really, whether anyone believes this can be viewed through a very
> different lens: multiple times in the past week, US exchanges have ceased
> trading due to automatic circuit breakers from 7% drops in the market.
> Surely if the market is all knowing we shouldn't trigger these mechanisms
> and instead just let the invisible perfect hand let people sell stocks
> freely.

Yes, you're basically right despite intending to be sarcastic. The circuit
breakers are stupid and there's no real good reason for them to exist. Levine:

> The basic idea of stock-market circuit breakers is, like, some news happens,
> and the market reacts precipitously, and stocks fall 7%, and the market gets
> turned off for 15 minutes so that everyone can have some time to think and
> digest the news and see if they want to buy. On an average Tuesday
> afternoon, not everyone who might want to buy stocks is watching the market
> every minute. The computers are, sure, but some long-term investors are busy
> doing other things, reading 10-Ks or meeting with executives or whatever.
> Someone needs to call them up and say “hey not sure if you noticed but
> stocks are cheap now, you should buy some.”

> But you generally want to do this sort of thing through mechanical bright-
> line rules, and occasionally those rules get applied in kind of weird
> circumstances. The market did not fall 7% by 9:34 a.m. today because of
> shocking news that came out at 9:32! Investors had all weekend to ponder
> coronavirus news, and all of Sunday to ponder oil-price news, and they
> pondered it at their leisure, and futures traded limit-down, and then the
> stock market opened and investors applied their weekend’s worth of pondering
> to the market, with the result that the market shut down four minutes later.
> A weekend of pondering, four minutes of trading, 15 more minutes of
> pondering. I am not sure what you learned in the 15 minutes that you didn’t
> learn over the weekend.

Back to you:

> Nor is anyone questioning why it was suddenly urgent that the government put
> $USD1.5 trillion of liquidity into the market.

The government didn't do that. It _loaned_ $1.5T over a very short term to
banks. It was not targeted at the stock market and had no impact there.

~~~
XorNot
> The government didn't do that. It loaned $1.5T over a very short term to
> banks. It was not targeted at the stock market and had no impact there.

But if the free market should be allowed to run unimpeded, why did the
government need to intervene here, when apparently in the provision of basic
necessities you are arguing this is going _too far_?

~~~
loeg
Banks are some of the most highly regulated businesses that participate in
markets. One should not draw general conclusions from government intervention
in regulated banking programs.

> when apparently in the provision of basic necessities you are arguing this
> is going too far?

I made no such argument.

------
pgt
Taxes working as intended?

------
m3kw9
And that eBay btch az couple that is buying up Lyso wipes and reselling them
on eBay for 3x

------
caoilte
Better to get on with closing nearly every store and introduce rationing. This
is stalling.

------
sangd
We should be applying a much hefty fine for stock investors or other kinds of
investors if this $5k price-gouging is reasonable.

