Re:Economists who defend disaster profiteers are wrong
by roenxi on Tuesday April 14, 2020 @03:40AM
(#22863561)
The buyers aren't really the important part of the story.
In a crisis there is a desperate need for producers to produce more of the goods that are in shortage. Blocking crisis profiteering means that whoever is getting the benefits of arbitraging the shortage the only people with no opportunity to benefit are the producers. Ie, the only action that gets blocked is consumers formally allocating more resources to production using money.
From that frame it is a bizarre strategic blunder to implement pricing restrictions in a crisis. The problem won't get solved at any hurried speed if it is only a little bit profitable to solve it. Market theory suggests the pre-crisis prices were optimised to minimise profits; they really need to go up to get a response from marginal producers.
In a crisis there is a desperate need for producers to produce more of the goods that are in shortage. Blocking crisis profiteering means that whoever is getting the benefits of arbitraging the shortage the only people with no opportunity to benefit are the producers. Ie, the only action that gets blocked is consumers formally allocating more resources to production using money.
From that frame it is a bizarre strategic blunder to implement pricing restrictions in a crisis. The problem won't get solved at any hurried speed if it is only a little bit profitable to solve it. Market theory suggests the pre-crisis prices were optimised to minimise profits; they really need to go up to get a response from marginal producers.