Everybody believes that, in general. But in the short term, the elasticity of supply with respect to price approaches zero. If we ramped up production though, it would be too late, and then there would be a glut.
If some other store did not ration the product, then they would have empty shelves, so I'd go to the one that did.
Because they had a government gun to their head in the form of anti-gouging laws, or implications for the same. That's what I am arguing against.
If they were free to set prices, they might consider raising prices to keep stores in stock, rather than ration. They might not, if they calculate it will be a long-term PR hit. But right now, they are not free to choose.
Further, local and state politicians and AGs often are seen grandstanding about how they stand ready to prosecute anyone who is raising prices on necessities beyond the normal price (sometimes allowing +10%, but often not even being explicit about that, leaving businesses in a murky area).
Watch for it next time a power disruption hits your local area.
If the marginal profit on TP is $0.10/roll and the price is not allowed to increase in time of excess demand, you’re likely to see factories optimize to squeeze every efficiency out, trying to eek out another penny per pack of 6 rolls.
Imagine instead a world where prices rise in times of excess demand. Producers now have an incentive to maintain flexibility in monthly production, not squeezing the last fractional penny out and instead allowing flex to over-produce when demand is high (and prices/marginal profit is higher).
Likewise, warehouse and distribution adapts to capitalize on high prices, using those high prices as a signal to get more goods to flow to those demanding the goods. In other words, more toilet paper is available for people who want toilet paper.
Instead of today’s world where I have to shop twice a week instead of once, or can’t add a more vulnerable neighbor’s shopping to my own, because we are limited to how many eggs I can buy in a single trip. How does that help anyone’s health?