Quote:
Originally Posted by Isaac Zachary
Perhaps. But then the price of toilet paper would have been $100 per roll.
In either case, those that panic stockpile make it hard on the people who don't or who start stockpiling late.
The real solution is for everyone to have some sort of emergency stockpile starting now, not when disaster strikes. On the other hand, not everyone has a place to put 3 months or more of supplies.
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That's the brilliance of markets; that they tend to leverage human nature to maximize wellbeing. While we'll never know what the natural price of TP would have risen to in response to increased demand, I promise it's closer to $1 per roll than $100. If price simply doubled, people would be shocked and then think maybe they only need 1 package, or could get by with what they have for now. They might even consider using their existing supply more sparingly. I'm teaching my 3 year old about "just the right amount" at the moment; something most adults probably haven't mastered.
The thing is, increasing price always occurs despite anti-gouging laws. Opportunists simply buy up all the supply early and then sell at several times their cost. If prices were allowed to adjust as they do regularly in a market, it would cut out the inefficiency of those opportunists, and quickly there would be incentive for manufacturing to ramp up supply. If manufacturers can't receive price signals from demand, they have no incentive to pay people overtime to produce more.
This is all econ101 stuff, but people who believe in such things as gouging don't live in reality. There are no economists who think the best way to handle a shortage is to artificially impose a price.