3 thoughts on “The economics of panic buying”

  1. Posted 24/03/2020 at 08:49 | Permalink

    just a couple of points. The prisoners’ dilemma is often stated incompletely for good reasons that it is illustrating a particular point. However, if the prisoners can confer and come to an enforceable bargain, it does not hold. The same is true with panic buyers. In fact, they can confer. However, they cannot come to an enforceable bargain by which they agree to limit their purchasers (too many people, too difficult to enforce). Secondly, price increases will also limit and redirect demand such as from pasta to rice or make people defer purchases.

  2. Posted 24/03/2020 at 23:59 | Permalink

    Hi
    When you say, “I would have no sympathy for someone who has bulk bought existing stocks of loo rolls, or hand sanitisers, and is trying to sell them at vastly inflated prices in their corner shop or online. That is pure ‘profiteering’, or ‘price gouging’, and even I’m against it.” What is it exactly that you’re against? Vastly inflated prices, whereas a decent margin is OK? Or someone anticipating future demand, taking a risk by spending their own money buying stock and being rewarded by being able to sell at a higher future price if their gamble on future demand comes off? Isn’t this how markets are supposed to work?

  3. Posted 25/03/2020 at 17:33 | Permalink

    In response to Paul. This is where problems start in my opinion. When economists start attacking points based on moral issues and not market-based analysis. Just like you said, who says it’s ok to profit by a small margin (like the shops) and not by a larger margin ( like the “investor” outside the store ). Additionally, just like you said, the market should do its own work. Let the guy outside the store sell at whatever price he wants. Most people won’t buy from him if it’s extremely high anyway. If there is a big shortage, and the investor took the risk and invested capital, then they fully deserve to earn their money. In my opinion, the investor is in a way taking advantage of the pandemic in a “cynical” way by exploiting the lack of toilet paper, but it definitely is not for an economist to analyze this issue from a moral point of view. Leave that to the courts.

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