Original Post
WTF is price-gouging?
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A really dumb question...
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It's when a seller takes advantage of a situation to over-charge you, like during a major disaster and everybody but one retailer runs out of beer, so that one retailer bumps its price of beer up to $5 a bottle. It's price gouging.
Price gouging is whenever you thing you are being cheated.
CM
CM
Quote:
Original post by zer0wolf
It's when a seller takes advantage of a situation to over-charge you, like during a major disaster and everybody but one retailer runs out of beer, so that one retailer bumps its price of beer up to $5 a bottle. It's price gouging.
It's also the phenomenom described a few hundred years ago by the infamous Adam Smith. Its how market enonomies work. Its how market economies have always worked.
CM
Quote:
Original post by Conner McCloud
Price gouging is whenever you thing you are being cheated.
Yeah, like when I get charged so damn much for a fifth of the old Captain. That's price gouging.
Quote:
It's also the phenomenom described a few hundred years ago by the infamous Adam Smith. Its how market enonomies work. Its how market economies have always worked.
Yeah, that's the benefit of capitalism and free trade. [wink]
Okay, simple enough.
Quote:
Original post by Conner McCloud
Price gouging is whenever you thing you are being cheated.
CM
Ahh, why don't you post more? So funny, so subtle. [grin]
I wish I could rate you up more.
It's a myth that is used by anti-capitalists to scare monger over situations of rapid decrease in supply versus rapid increase in demand, during times of disaster.
If a natural disaster knocks out power in a town, demand for ice will increase dramatically as people attempt to keep their food cool. At the same time, the supply of ice crashes, as there is no power to make more ice, or keep stock ice cool. Ice must be shipped in from outside sources, incurring additional overhead versus pre-disaster ice.
What do you do when people need more ice than you have? How do you make sure that everyone gets the ice they need, and that noone takes more ice than they need? You must ration it. How do you most effectively ration a product? You increase it's price.
If ice stays at $1 a bag, the first person at the store might buy up all the ice to keep his steaks in his freezer cool. Why not, ice is only a dollar a bag, the cash in my wallet right now will cover that cost for a week. Unfortunately, he is leaving none for the second person who must keep his insulin cool. However, if ice is $20 a bag, then perhaps the first person will reconsider the necessity of saving a $5 steak during a disaster situation. When the second man arrives to buy ice, he finds some in stock (though the stock is low), complains about paying $20 a bag for frozen water, but still has ice to keep his insulin cool.
When hurricanes damage homes in Florida, the supply for roofers does not change, but the demand dramatically increases. People cry "price gouging" when roofers increase the price for their services. However, the new high price attracts new roofers from other areas, areas too far away to remain profitable under non-disaster situation. Knowing that higher price per roof will recouperate the transportation overhead of travelling to Florida, roofers from as far away as Pennsylvania make the long haul to the Sunshine State (aside: that cracks me up, Florida peddles more cancer than Phillip Morris could ever dream), thereby matching the increase of demand with an increase in supply.
There is no such thing as price gouging.
If a natural disaster knocks out power in a town, demand for ice will increase dramatically as people attempt to keep their food cool. At the same time, the supply of ice crashes, as there is no power to make more ice, or keep stock ice cool. Ice must be shipped in from outside sources, incurring additional overhead versus pre-disaster ice.
What do you do when people need more ice than you have? How do you make sure that everyone gets the ice they need, and that noone takes more ice than they need? You must ration it. How do you most effectively ration a product? You increase it's price.
If ice stays at $1 a bag, the first person at the store might buy up all the ice to keep his steaks in his freezer cool. Why not, ice is only a dollar a bag, the cash in my wallet right now will cover that cost for a week. Unfortunately, he is leaving none for the second person who must keep his insulin cool. However, if ice is $20 a bag, then perhaps the first person will reconsider the necessity of saving a $5 steak during a disaster situation. When the second man arrives to buy ice, he finds some in stock (though the stock is low), complains about paying $20 a bag for frozen water, but still has ice to keep his insulin cool.
When hurricanes damage homes in Florida, the supply for roofers does not change, but the demand dramatically increases. People cry "price gouging" when roofers increase the price for their services. However, the new high price attracts new roofers from other areas, areas too far away to remain profitable under non-disaster situation. Knowing that higher price per roof will recouperate the transportation overhead of travelling to Florida, roofers from as far away as Pennsylvania make the long haul to the Sunshine State (aside: that cracks me up, Florida peddles more cancer than Phillip Morris could ever dream), thereby matching the increase of demand with an increase in supply.
There is no such thing as price gouging.
This reminds me about CRYO's KGB from mid 90's. Simply reminds me about some of those things. (the game was also know as conspiracy...I think.).
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