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"For goods that you can produce more of, allowing prices to rise gives producers the incentive to make more, which eventually bring prices down toward where they were before the increase in demand."https://marker.medium.com/price-gouging-could-actually-fix-our-face-mask-shortage-e85abb16b75e …
Incidentally, a big part of the reason we have PPE in hospitals is that donors are compensating for the market distortions introduced by US price regulations. They pay market price to Chinese manufacturers, and then give the masks for free to US hospitals.
Hmm. I bought some last year, had them for medical spouse... Who yet to get enough from employer... Seems depending on the kindness of strangers is a stupid way to go.
Wicked spicy.
The "market" price they pay to manufacturers is a fraction of gouging prices in the US, so there goes that theory.
Also for goods that you can't produce more of, allowing prices to rise protects supply by encouraging buyers to economize their use and buy only what they need
Is it so hard to think that the market is under enormous stress? What’s so puzzling is why haven’t Indrpendent entrants created more capacity? We’re masks a net loss on each sale before the pandemic? Doubtful and now the floor on mask demand is much higher likely for years out
Possibilities: 1) High initial cost of entry (procuring a machine or switching a process) that would be a no brainer at a higher cost but not so obvious at current cost. 2) Current items they make are more profitable at current costs (but wouldn’t be at higher costs).
So is this suggesting that hospitals would refuse to pay the gouge prices?
It also gives a huge incentive for criminality and ‘modern piracy’. So uncontrolled market forces in times of scarce supply of life saving goods for HC sector workers isn’t wise.
Big part of the reason you have PPE in your hospitals is that your “donors” gazumped less rich countries who had already negotiated lower prices.
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