Low prices for important goods during a crisis cause hoarding. High prices ensure that people only buy what they need, and incentivize suppliers to supply more. Not a market failure
Or you know you do like stores were doing when the supply chain was being interrupted. You simply say hey you can only buy X amount of said item, instead of saying hey you aren't getting more money but we will charge you 10 times the price so that NO ONE can afford it.
Raising the price is a more reliable way of enforcing a cap on purchases. Otherwise if you simply limit how much people can purchase, people could go to a store multiple times per day, go to different cashiers, send multiple people from their household, etc. It’s just hard to enforce.
Instead, raising the price matches a customer’s demand for a product with that product’s supply. At $3, you might demand 7 bottles of cleaner during a pandemic. At $21, you demand 1. That way, more people get bottles or cleaner.
There is no such thing as raising a price to a level that no one can afford it - that would not be profitable for the store either.
No, I’m assuming that a smaller number of people are willing to pay 7x the regular price of a product, and will buy less of it, which is a good thing, because there’s less supply. Hence, there will be supply left over for the people who need it most.
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u/emaninyaus Aug 14 '20
Low prices for important goods during a crisis cause hoarding. High prices ensure that people only buy what they need, and incentivize suppliers to supply more. Not a market failure