Deleted
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Post by Deleted on Mar 16, 2011 9:01:28 GMT -5
Charging more for essential items during a crisis is a good thing. Essential items are hard to get during a crisis. There are lots of risks for the supplier of these items. But if the reward for supplying these items is great, then more people will take the risk and more essential items will be available for those in a crisis.
Ergo, price gouging as a negative is a myth and in fact it is necessary and helpful.
Discuss.
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schildi
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Post by schildi on Mar 16, 2011 9:07:05 GMT -5
Archie, this logic is not necessarily true.
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Post by Deleted on Mar 16, 2011 9:07:41 GMT -5
Archie, this logic is not necessarily true. Lay it on me.
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resolution
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Post by resolution on Mar 16, 2011 9:07:44 GMT -5
I disagree about price gouging not existing. An example of this is the phameceutical company that just recently was given exclusive rights to manufacture a formerly generic pregnancy drug. They have raised the price from $10 per dose to $1500 per dose, and they didn't incur any of the research costs to develop it. www.digtriad.com/news/health/article.aspx?storyid=165509eta oops typo on the price
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alabamagal
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Post by alabamagal on Mar 16, 2011 9:08:28 GMT -5
Agreed, as long as there is truly a "free" market with plenty of suppliers.
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Post by Deleted on Mar 16, 2011 9:08:53 GMT -5
It's called a FREE market. Something is only worth as much as someone is willing to pay for it.
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Post by Savoir Faire-Demogague in NJ on Mar 16, 2011 9:19:39 GMT -5
I disagree about price gouging not existing. An example of this is the phameceutical company that just recently was given exclusive rights to manufacture a formerly generic pregnancy drug. They have raised the price from $10 per dose to $1500 per dose, and they didn't incur any of the research costs to develop it.
The pharm now making the drug also has significant liability risks due to being the only manufacturer. Previously, the risk was spread across dozens, if not 100s of makers. They are now singly exposed to 100s of millions in risk. Pretty simple stuff here.
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Deleted
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Post by Deleted on Mar 16, 2011 9:21:01 GMT -5
I disagree about price gouging not existing. An example of this is the phameceutical company that just recently was given exclusive rights to manufacture a formerly generic pregnancy drug. They have raised the price from $10 per dose to $1500 per dose, and they didn't incur any of the research costs to develop it. www.digtriad.com/news/health/article.aspx?storyid=165509eta oops typo on the price I guess I was thinking more about price gouging during a disaster. Not general price gouging by a monopoly.
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resolution
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Post by resolution on Mar 16, 2011 9:22:18 GMT -5
I disagree about price gouging not existing. An example of this is the phameceutical company that just recently was given exclusive rights to manufacture a formerly generic pregnancy drug. They have raised the price from $10 per dose to $1500 per dose, and they didn't incur any of the research costs to develop it. The pharm now making the drug also has significant liability risks due to being the only manufacturer. Previously, the risk was spread across dozens, if not 100s of makers. They are now singly exposed to 100s of millions in risk. Pretty simple stuff here. How does the amount of risk per dose manufactured change?
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Post by Deleted on Mar 16, 2011 9:23:51 GMT -5
I disagree about price gouging not existing. An example of this is the phameceutical company that just recently was given exclusive rights to manufacture a formerly generic pregnancy drug. They have raised the price from $10 per dose to $1500 per dose, and they didn't incur any of the research costs to develop it. www.digtriad.com/news/health/article.aspx?storyid=165509eta oops typo on the price But that's not a free market - that's a monopoly. If they didn't have "exclusive" rights, then other companies could produce the same/similar product and there would be competition.
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Small Biz Owner
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Post by Small Biz Owner on Mar 16, 2011 9:26:24 GMT -5
Get your Potassium cyanide right here, discount price. Oh, you wanted Potassium iodide? My bad. RIP
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resolution
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Post by resolution on Mar 16, 2011 9:27:28 GMT -5
I disagree about price gouging not existing. An example of this is the pharmaceutical company that just recently was given exclusive rights to manufacture a formerly generic pregnancy drug. They have raised the price from $10 per dose to $1500 per dose, and they didn't incur any of the research costs to develop it. www.digtriad.com/news/health/article.aspx?storyid=165509eta oops typo on the price But that's not a free market - that's a monopoly. If they didn't have "exclusive" rights, then other companies could produce the same/similar product and there would be competition. I agree it is not a free market and the problem is due to a monopoly. I guess I read the OP differently and didn't see a free market in there, just the question of whether price gouging can exist. I don't see a problem with prices going up due to demand in a free market, just in a situation where supply is artificially restricted.
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Bluerobin
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Post by Bluerobin on Mar 16, 2011 11:26:24 GMT -5
Arch, my area was once in a great disaster. Some espoused the same attitude as you and began gouging. They eventually got arrested.
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Angel!
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Post by Angel! on Mar 16, 2011 11:39:42 GMT -5
I disagree about price gouging not existing. An example of this is the phameceutical company that just recently was given exclusive rights to manufacture a formerly generic pregnancy drug. They have raised the price from $10 per dose to $1500 per dose, and they didn't incur any of the research costs to develop it. www.digtriad.com/news/health/article.aspx?storyid=165509eta oops typo on the price Not quite true. From the same article: "To get FDA approval, the company is spending hundreds of millions of dollars in additional research, including an international study involving 1,700 women, Divis said. " They spent hundreds of millions to get FDA approval & research the side effects of the drug. They also now have liability should their be any problems in the future. They also have a program to help households making under 100K get the drug at a cheap price.
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8 Bit WWBG
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Post by 8 Bit WWBG on Mar 16, 2011 11:41:49 GMT -5
Sometimes being morally right isn't worth the trouble. While the law may support someone selling bottled water for $50/bottle, the law can only provide so much help to that shopkeeper when a mass of people break the door down, beat the crap out of him, and take his water.
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Post by Deleted on Mar 16, 2011 12:17:04 GMT -5
Sometimes being morally right isn't worth the trouble. While the law may support someone selling bottled water for $50/bottle, the law can only provide so much help to that shopkeeper when a mass of people break the door down, beat the crap out of him, and take his water. Amen! Haiti comes to mind. My family was telling me how some business people were and still are taking advantage of the disaster. My wife lost a high school friend in the disaster. They asked her friend parents $10,000 for a casket that usually costs $2,000. It got so bad that people went as far as digging up old caskets to sell them back. But we do have a few business owners that stepped up and went the opposite way, God bless their soul. If you go to Haiti visit Epi D'or or Pizza Garder at Petion Ville, they were giving free food at to those in need. They stepped it up and for that they will always have the community support and respect.
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busymom
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Post by busymom on Mar 16, 2011 12:17:50 GMT -5
College Economics: It's all about supply & demand.
When a severe windstorm/tornado went through our area, men with pick-up trucks were going door-to-door offering to "get rid" of your downed tree. The regular tree services were overwhelmed with business, so the cost of tree removal went sky-high. What could you do if you had no other way to get rid of your fallen tree(s)? Supply & demand.
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Post by Deleted on Mar 16, 2011 12:18:22 GMT -5
Arch, my area was once in a great disaster. Some espoused the same attitude as you and began gouging. They eventually got arrested. The government arresting the people who are trying to help.. nice.
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hoops902
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Post by hoops902 on Mar 16, 2011 12:26:01 GMT -5
Sometimes being morally right isn't worth the trouble. While the law may support someone selling bottled water for $50/bottle, the law can only provide so much help to that shopkeeper when a mass of people break the door down, beat the crap out of him, and take his water. This is exactly why you do charge $50/bottle and it's not price gouging. When you hold something that everyone wants/needs and there is a limited supply, you take a huge risk in holding that item at all. Unless you're giving it all away for free there will always be people who have nothing who want what you're selling, and possibly willing to kill you for it. If you're going to give it away why bother stocking it in the first place? You're charging $50/bottle because maybe at $50/bottle the risk that you might get killed for your product makes some sense, selling it at $5/bottle and dying over it has all risk and no reward. What's better for the area? That someone comes in and sells a necessity at inflated prices? Or that no one brings that necessity to the area because they're uncompensated for the heightened risk they bare?
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Clifford
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Post by Clifford on Mar 16, 2011 12:31:46 GMT -5
Wish I had gone in a little deeper on KV. My stocks are up 300%! Evidently their raising of the price did not scare the stakeholders or analysts. In other words, they can charge what the market will bear.
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sesfw
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Post by sesfw on Mar 16, 2011 13:53:31 GMT -5
'price gouging during a disaster.'
I have known of price gouging in a small town with gasoline many years ago. One station had an explosion so was down for a couple of months, and the other station doubled the gas price. Once the second station was back in business, the gouging station lost ALL of the customers and finally went out of business completely.
No reason for the price doubling, he did it because he could.
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schildi
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Post by schildi on Mar 16, 2011 13:56:04 GMT -5
I disagree about price gouging not existing. An example of this is the phameceutical company that just recently was given exclusive rights to manufacture a formerly generic pregnancy drug. They have raised the price from $10 per dose to $1500 per dose, and they didn't incur any of the research costs to develop it. The pharm now making the drug also has significant liability risks due to being the only manufacturer. Previously, the risk was spread across dozens, if not 100s of makers. They are now singly exposed to 100s of millions in risk. Pretty simple stuff here. How does the amount of risk per dose manufactured change? Yeah, I kinda wondered about that, too. Doesn't make sense, does it? SF, explanation, please.
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schildi
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Post by schildi on Mar 16, 2011 13:56:56 GMT -5
Get your Potassium cyanide right here, discount price. Oh, you wanted Potassium iodide? My bad. RIP LOL.
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NoNamePerson
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Post by NoNamePerson on Mar 16, 2011 14:21:28 GMT -5
'price gouging during a disaster.' I have known of price gouging in a small town with gasoline many years ago. One station had an explosion so was down for a couple of months, and the other station doubled the gas price. Once the second station was back in business, the gouging station lost ALL of the customers and finally went out of business completely. No reason for the price doubling, he did it because he could. This happened after a major hurricane back in 79 and placed was closed within 3 months. They had been in business for maybe 20 yrs before that. I live in a state that puts a cap (percentage) on gas increase in a declared federal disaster area. Can't remember what the increase percentage can be.
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8 Bit WWBG
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Post by 8 Bit WWBG on Mar 16, 2011 14:32:41 GMT -5
...:::"What's better for the area? That someone comes in and sells a necessity at inflated prices? Or that no one brings that necessity to the area because they're uncompensated for the heightened risk they bare? ":::...
But if the price is unaffordable, then it doesn't matter if the item is there because nobody can buy it. And if you are gouging on a necessity like water, then people probably WILL kill you for it. Whereas when Xbox360s were being sold for double or triple the price on ebay, people would probably be more tolerant.
The OP talks about essential items, which I can see is a key difference. If you pre-ordered a hot tech toy and are making money off early adopters, that is a vastly different situation than charging $20/gallon for gasoline in an emergency.
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runewell
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Post by runewell on Mar 16, 2011 14:38:09 GMT -5
I would say that there IS such a thing as price gouging, but it is part of having a free market.
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hoops902
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Post by hoops902 on Mar 16, 2011 15:59:29 GMT -5
"But if the price is unaffordable, then it doesn't matter if the item is there because nobody can buy it."
You really think that they set the prices so high that NO ONE can afford it? If no one buys it, it's not really much of a necessity.
"that is a vastly different situation than charging $20/gallon for gasoline in an emergency. "
As opposed to what? Charging $5/gallon and selling out in 5 minutes and having no more supply left?
I'm not saying there's not a price that people won't kill you for it. But that's kind of the pricing strategy. Price it high enough that the supply equals demand and still leaves you with a way to protect yourself. What's the highest price that I can set where I make the most profit and can still get out alive?
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2kids10horses
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Post by 2kids10horses on Mar 18, 2011 7:48:04 GMT -5
If prices are allowed to rise, it will encourage more suppliers to deliver product to the affected area. The supply of essential items will improve, and eventally prices will fall again as supply increases to meet the level of demand.
The lure of high profit will accelerate the delivery of essential items to the affected area faster than can be accomodated by purely humanitarian efforts. Sure, humanitarian efforts are wonderful, but there's probably a limit as to how much others can afford to "give" to supply aid.
If the free market is allowed to supply goods it will deliver faster and in greater quanities than if prices are required to remain fixed.
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Post by straydog on Mar 19, 2011 6:43:46 GMT -5
Cawiau: But we do have a few business owners that stepped up and went the opposite way, God bless their soul. If you go to Haiti visit Epi D'or or Pizza Garder at Petion Ville, they were giving free food at to those in need. They stepped it up and for that they will always have the community support and respect.
SD: Exactly. When the price gougers strike, there will always be an opportunity for others to come in and do good business.
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Post by commentator on Mar 20, 2011 22:52:48 GMT -5
"There is no such thing as price gouging"
Spoken like a true economist.
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