Quote:
Originally Posted by TomkinsSP
Economics 101.
The market price is what the market is willing to pay (without being compelled) for an item or service.
When supply is limited (unfired s&w victory models) price serves to establish an equilibrium between supply and demand. At $300.00 none are available, at $2,000 people looking for shooters choose other guns, but serious collectors may still obtain this desired artifact of history. At $5,000 few will forgo the opportunity to obtain multiple other options, but some will buy out of exceptional desire and/or to "complete their collections".
If an authority establishes an 'official price" that is less that what people are freely willing to pay. Say Wal-Mart selling .22LR for $3.00 per box of 50, people with funds will see opportunity and buy all of the available supply and resell on the secondary market.
Think of stores in the former Soviet-Union. Low official prices, no supply. Shoes sold off the dock at the factory. Vodka replacing the ruple as currency.
Our elected officials haven't figured this out. If you compel purchase of a product, you drive its price up. If you restrict manufacture by legislative fiat, you drive the prices in the marketplace up. If you restrict choice through uneven taxes or tariffs, you drive prices up.
If you wish to feed your children fresh fruit and the price of strawberries go up, you consider purchasing blueberries or raspberries. In this way all the available fruit is distributed to willing buyers.
Even in the event of a natural disaster, price fluctuations serve to ration limited resources, increased prices serve to reduce use, and to encourage those who possess excess to bring that excess to market.
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While that is Economics 101, lets talk about unscrupulous people who live up to the term "Price Gouging". For example, the recent hurricanes caused some refineries to shut down. Gas prices, even in places the gas was never shipped to when the refineries were operating. Then, when the refineries come back on line, gas prices don't fall until long after the 'pipeline' has been replenished. I remember a power outage that effected a large portion of SE Michigan. Some gas stations outside the outage area raised their prices by a dollar a gallon.
On a different front, let's talk pharmaceutical companies. America, that's right - the entire country, has been getting gouged for drugs for decades. Yes, drugs cost money to research and develop, but that fails to explain why Americans pay for more drugs than any other nation on earth. People living near the Canadian and Mexican boarder can attest to that.
Yes, despite what economics may indicate, gouging does happen. If it's a commodity you can do without, it's merely frustrating, but when it's a commodity you need, like fuel to get to work, or medicine to avoid dying, frustrating doesn't begin to describe the problem.