@maxdancona,
maxdancona wrote:
There is an interesting similar problem with Ticket prices for shows.
In any product there is the real market price (i.e. what people are willing to pay), and the ticket price. If the ticket price is the same as the market price, everyone just pays and the market works.
Often the ticket price for a show like Hamilton is significantly lower than the real market price. This is artificial and causes irrational behavior. This is the only time you see hoarding and scalpers... people buying up more tickets than they need because they know they can sell them at a profit. If the ticket price is the market price, then no one can do this.
In a normal market, the sticker price for a dozen eggs is the same as the market price. People just buy the eggs they need from the market efficiently. There is no pressure for people to buy more eggs than they need.
If the market price for eggs goes up (during a crisis for example) and the sticker price also goes up. There is no problem. People will still buy the eggs they need from the market. There will be no reason to buy more, in fact as the price goes up people will generally buy less.
What is happening is artificial. The market price for eggs (and toilet paper, and clorox wipes) is going up. But the sticker prices for these products at supermarkets is being artificially held down. We have made it socially impossible for business to do the natural thing, and this causes problems.
As long as the sticker price is artificially lower than the market price, you are going to face disruption in the market. This leads to empty shelves, hoarding or both.
Whenever the price of anything goes up, the market is sending a signal to buy less and produce more.
People who can't afford a product whose price is rising, or who just don't want to waste that much money on it, seek substitutes.
If the prices of everything (and their substitutes) are going up, and people's money is running low/out, they could look for ways to make things for themselves, e.g. grow their own food, make their own clothes, etc.
Or they might start forming criminal organizations/gangs to control supply chains, exploit people outside the organization with unfair prices, etc.
Isn't that basically what corporations and insurance groups do?
.
