Allowing the price to move up with market demand will encourage increases in production. It just takes some time, especially in a pandemic, for the production to catch up.
Which might be fine for things like web cams but for critically and immediately needed sanitation products, it proves a fatal flaw in markets. The reward for quickly buying up commodities and reselling them at enormous markup always out weighs stockpiling them for years and potentially never selling them at the same mark up.
Not to mention destructive hysterical hoarding. There is someone in this thread who noticed an extreme shortage in webcams so when only two were left in a shop, he bought both.
People are hoarding, because they are not rationing. They are not rationing, because prices are too low. Prices are too low, because it is either illegal or retailers would rather have a shortage than tarnish their brand. If you allow prices to rise, then we will see both an increase of supply and increased rationing by the population.
TomMckenny|5 years ago
Not to mention destructive hysterical hoarding. There is someone in this thread who noticed an extreme shortage in webcams so when only two were left in a shop, he bought both.
foofoo4u|5 years ago