What a cool podcast on "price gouging" in the event of natural disasters. Just another one of those things you may not have looked at objectively and in a broad sense. The concept is that when you limit the prices a vendor can charge for an item, the end result is that the product is not even offered at market because essentially the incentive to bring the product to market is obliterated. So the price is infinity instead of whatever "gouging price" the vendor tried to charge. Also, the gougers won't charge any amount that people can't pay, because they'd be wasting their time and money investment in the venture. So over the course of the sales, the price will end up representing the perceived value of the good by the people that really need it. In the example discussed, so-called price gouging even takes care of making sure the ice (typically) makes it to those to whom it matters most. A person who was in line to buy the ice to keep their beer cold will not be willing to pay say $12 a bag of ice while a person trying to keep insulin cold will, so on average, the insulin person will get it, and will be happy paying $12, maybe even $50 and will feel like they got a deal.
Damn, economics is fun. (I think)
Hope everyone is enjoying summer.
Need any starts? I will probably have extra zucchini, beans, sugar snap peas, maybe spinach and lettuce, and some dill.
Let me know and get a pot and some dirt, I'll hook you up when they are ready.
Peace, y'all.
7.17.2009
Blam!!
Subscribe to:
Post Comments (Atom)
3 comments:
Oh and if you like the podcast, which I bet you will, check out the comments at the bottom of the page. Some interesting ideas are brought up.
This is now one of my faves from EconTalk.
Hahaha
The incentive can still be to make a profit, applying a ceiling to profit in the event of a natural disaster limits profit, but doesn't eliminate it in every case. Also, in terms of a natural disaster, incentive exists through the desire to do good and help others by people donating their time, money, and goods. Actions taken under good will incentive insure, in principle at least, that the goods and the help goes to those who need it the most, instead of relying on price to qualify the need. Plus we've seen that natural disasters impact the lower class to a greater degree than others. Price limits on necessary goods prevent the exploitation of people in need. I am moving soon and won't have internet so I won't be able to respond until god comes down to earth and gives me a functional computer with free internet access. Oh and this is Jacob by the way, I forgot all my information to log in with, but I think I have it saved in my old phone, which I'll check and step my log in game up.
Post a Comment