But that constricts the supply because if you want to make a short term investment (the length of the pandemic) to increase the supply of home toilet paper, you can't as that investment can't generate a return. Most production is based on demand being there for 5+ years the current prices.

If home toilet paper demand will only be high for 2 years you can't make money.

You also want prices to increase to discourage hoarding. Otherwise what happens is that people with disposable income just strip the shelves because there is no possible downside to hoarding toilet paper. They can just not buy it later with no loss to themselves if the price is the same.

I know an EE in the toilet paper manufacturing. The production rate wouldn't change in the time frame you want it to because it is impossible. You'd have to bring in new machines, set them up on the line (the rest of the line has to stop), and trouble shoot any issues - this reduces production in the short term. For any temporary price increase it just isn't going to happen.

So, raising the price on TP does nothing to increase supply in a 1 month time frame and reduces availability to the poorest. Instead, reduce demand with a bidet and limit customer purchases.

Do you think there would be any effect on the mindset of toilet paper manufacturers if they knew they could raise the price in a shortage? Would they not want to prioritize higher flexibility in production, since they would be able to profit from the higher prices during a shortage?

That's only true if all the plants run all their lines 24x7.

If you have some plants that are not at capacity, you can hire additional shifts to produce more, run on weekends, etc. Then you have additional labor costs, overtime, materials costs, etc. to recoup.

The manufacturing plant I once worked for had spare capacity for the better part of a decade, so it's not some completely unusual thing and was in fact part of our corporate strategy at the time to gain market share.

Right, but that doesn't mean the price has to increase. If they are profitable and handle all their fixed costs running a single shift, then the second shift should be more profitable at the same price. (Assuming the machines can handle it, etc.)

Depends on how much overtime they have to factor into there. In the short term, especially for short term demand, it's going to be a lot of people making time and a half or 2x more likely than not.

A new shift will take a while to train up and temps are... ugh... don't even get me started about the sort of people temp agencies send. We had some that only lasted a day for not listening and doing stupidly unsafe things. One of them nearly hit me upside the head with a piece of glass because he wasn't paying attention to where he was swinging it. That was his last day on the job, for precisely that reason.

That is addressing a different point. The comment I was responding to claimed people were upset that companies are making a profit. I countered that profit is OK, profiteering is what has people irate.

What is the ideal pricing to achieve long term goals wasn't something I was addressing.

And MattGaiser's point is that the line between profit and profiteering is vague. The claim is that by saying no to vague "profiteering", we have at least discouraged some of the morally healthy profit that would've encouraged otherwise inefficient production.

The short term is too short: the investment won't pay back. Almost all profiteering reduces supply by causing hoarding and waste rather than use. Plus the dead weight loss of people killed by lack of PPE.

How does profiteering reduce supply? Or it's use?

If anything it's the opposite.

I agree if the disaster is truly short term, but is an 8 month rolling quarantine short enough to count?

If their supply chains are decimated, they won't receive new equipment for additional manufacturing.

But they may be able to hire additional shifts or work overtime on existing production lines.

Not every plant is run at a constant 24x7 three shift schedule. There are plenty of businesses that keep some slack in their manufacturing to respond to changes in demand as part of their corporate strategy, especially if they think there's an opportunity to gain market share.

What percent is that? Also dont look just at manufacturing, but things like transport and raw inputs.

That's the rub, of course, it's going to vary by time and by industry and I doubt anyone but those who run the places can give you real numbers.

But in my experience, there's usually some slack. Maybe not enough to pick up all the demand, but there's some. Maybe they have three shifts but don't work weekends or such. Then they can have people pulling lots of overtime.

Raw materials are usually well-stocked in advance. There is a limit on how much demand can spike before there are issues, of course, but some industries may have weeks or months worth of raw materials stocked. This is going to be highly variable by industry, though. Something like raw glass is nothing like stocking chickens for processing.

For TP I'd guess that they can stock a lot of raw materials, though. It's not made from anything that's going to go bad on them, so they probably stock up a lot based on whatever is cheapest.

IMO some price increase is a good idea to discourage hoarding, promote investment, and promote alternatives like a bidet. But, I think you achieve most of that with simply doubling prices, after that it’s generally more harm than good.

> But, I think you achieve most of that with simply doubling prices, after that it’s generally more harm than good.

How can one make such a vast claim without knowing things such as cost of input materials, machinery, labor, etc?

The profit in a competitive market is usually ~5%. Double prices while selling out and profit increases by 21x if not vastly more which is a huge incentive. To the point where doubling the profit again is unlikely result in meaningfully increased production.

PS: And yea it’s more complex than that, you can generally skip out in advertising but may be paying significant overtime etc. But that’s rarely particularly important as there are so many inputs involved in ramping up production that you hit multiple different limits.

To argue that every possible choice to both produce and conserve toilet paper is incentivized at $1.68 is an extraordinary claim. Almost all supply and demand curves don't have cliffs. And without extraordinary knowledge of toilet paper manufacturing and consumption how would you know this cliff exists at $1.68 per roll.

How is that not particularly important? In a shortage scenario, you don’t just crank up a dial to make the factory output more. You might need additional facilities, new factories, new workers, etc at the same time others are trying to secure resources too.

People in short supply also don’t just work additional hours for double pay. An hour of my leisure time is worth far more than double.

Though I believe you would not work overtime for double time, I also believe that an enormous number of people would do so.

5x more expensive might actually be the correct price. Remember that you cannot compare a price for a good manufactured overseas with lack labor laws vs something manufactured in the US with laws, insurance, regulations, etc.

Further, just as the US abandoned domestically made masks after the H1N1 epidemic, and went back to inexpensive overseas versions -- they may do it again with PPE. So you also need to cover the costs for quite-possibly a factory you are building that might stop operating in a year or two.

> 5x more expensive might actually be the correct price. Remember that you cannot compare a price for a good manufactured overseas with lack labor laws vs something manufactured in the US with laws, insurance, regulations, etc.

Perhaps so, but if that were the case, the producer wouldn't be fairly accused of profiteering. Usually these accusations arise when the production or acquisition cost for the seller is low and the sale price is very high.

That's true but there are quite a few people out there who don't understand/believe in that.

Talking about buying your own health insurance is taboo amongst some in the UK, even though it reduces pressure on the (I should "our") NHS, because to them it's immoral to have capitalism in healthcare or something like that