@maxdancona,
maxdancona wrote:
This is basic economics Lava. If you know that factories can produce toilet paper easily for pennies a roll, for you to buy and horde in the hopes that prices will go up is ridiculous. If I own a factory, the more you horde the more I make. This process will repeat until you run out of money. Your strategy only works when there is a truly limited commodity.
You're not looking at the realities of this current coronaphobia situation and how that is affecting supply-chains:
1) if toilet paper shelves are empty, that means customers have bought out existing supplies.
2) for suppliers to replenish those supplies, everyone has to be working and not staying home for quarantine, etc.
3) So as long as local people keep buying the TP faster than it can be restocked, there will be scarcity at the local level.
4) If you tried to raise the price of TP across the board to stimulate more supply/production, then more would be produced, but there would be a glut then, unless people were burning toilet paper to use it faster, which is what happened during the New Deal with pork, and of course in the famous grape-burning scene in the Grapes of Wrath.
They call it 'creative destruction' when you intentionally destroy/waste inventories to stimulate more purchases, but they should really just call it greed-driven-waste-for-profit.
Quote:Toilet paper is easy to make, so any scarcity is artificial. Which is exactly the point, as a society we are artificially suppressing the price, which is why there is scarcity.
No one is stopping you from making toilet paper and selling it at $10/roll. If no one wants to undercut your price, you'll have customers lined up all day.
How exactly do you think that "as a society were are artificially suppressing the price?" How exactly would "we as a society" do that?
If anything, I think the price is kept artificially high because of unnecessary business costs that are incurred by lower-cost retailers that would emerge if they were allowed to do so without expensive fees, etc. preventing them.
Flea markets, farmers' markets, etc. let you pay a little bit of money to rent an open-air spot to sell whatever you have to sell. If your lot rent is $50 for the day, you can afford to sell TP for a lot less than if you have to pay store rent, employees, shareholders, utility bills, etc.
If you had a direct supplier for TP at cost, and you set up a tent on the side of the road, or sold it out of the back of a truck/trailer, you would just have to sell it quickly to make it worth your time.
Let's say you could get at trailer load with a couple thousand packs of TP for $1/pack and you resold them for $2/pack, you'd make a couple thousand dollars, but how long would it take you to sell all those packs of TP if people don't mind just buying it at the grocery store with the rest of their groceries?
