tag:blogger.com,1999:blog-2830084253401570472.post4451204355407520746..comments2024-03-28T09:22:36.967+13:00Comments on Offsetting Behaviour: In praise of price gouging, revisitedEric Cramptonhttp://www.blogger.com/profile/15831696523324469713noreply@blogger.comBlogger17125tag:blogger.com,1999:blog-2830084253401570472.post-60996156349784710302012-11-04T15:55:13.022+13:002012-11-04T15:55:13.022+13:00Sounds like you received an economics lesson.Sounds like you received an economics lesson.Vnoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-43589220060172981212012-11-04T15:35:18.402+13:002012-11-04T15:35:18.402+13:00Exactly, from Chch the port in Timaru is only 2hrs...Exactly, from Chch the port in Timaru is only 2hrs away, which is probably similar to many large cities where it can be a 2hr drive across town from the port.<br /><br />In Chch when people headed to the petrol station to fill up 'just in case' was one of the most ludicrous situation I have observed from humanity - of course sitting in a long queue engine idling in such a situation is perfectly rational and totally optimal behaviour from creatures evolved from primiative apes.<br /><br />Where were these people going, sightseeing drives? <br /><br />Most filled up and went straight back home because there was nothing to do (ie. not much open). Home cleanup generally didn't require a huge amount of fuel for the task.Vnoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-58147468609228422772012-11-04T15:22:11.151+13:002012-11-04T15:22:11.151+13:00At least Chch handled the situation with a bit mor...At least Chch handled the situation with a bit more dignity and respect than NYers are capable of. <br /><br />As for trying to distribute 'free' gas in such an environment, crazy, that is one sure way of stoking animosity and divison in the mind of the public. After all if you are a govt. dept. you can just put it on the cc and the going rate and have the dept worry about it later.<br /><br />Looks to be a lesson on stupidity from the yanks ... <br /><br />http://www.nydailynews.com/new-york/responders-gas-article-1.1196180<br /><br />http://www.nypost.com/p/news/local/department_of_defense_setting_up_XK9Cli2PXUEFWZC0d8abMM<br /><br />http://www.dailymail.co.uk/news/article-2227307/Hurricane-Sandy-Lawlessness-outer-boroughs-New-York-enter-sixth-day-power.htmlVnoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-22918779644078605572012-11-02T21:14:44.109+13:002012-11-02T21:14:44.109+13:00And I am saying that is a horribly inefficient equ...And I am saying that is a horribly inefficient equilibrium in emergencies.Eric Cramptonhttp://offsettingbehaviour.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-34425082636502729282012-11-02T18:51:01.282+13:002012-11-02T18:51:01.282+13:00Price gouging is blocked because one-shot economic...Price gouging is blocked because one-shot economics don't exist. In other words, you can't model any economic transaction as if there aren't long term consequences, because humans evolved to create those very consequences via memory. A supplier that overprices at a moment of great import, is socially penalized by his entire customer base, who *actually prefers a random or inefficient selection in the short term*, because this leads to more predictable commerce in the long term. There's a reason people react so badly to price discrimination -- it's an optimum strategy.Dan Kaminskyhttp://www.facebook.com/people/Dan-Kaminsky/515164691noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-20277092208064952582012-11-01T11:32:55.197+13:002012-11-01T11:32:55.197+13:00Only greedy capitalists ;)Only greedy capitalists ;)Latsnoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-63593306153745596352012-11-01T11:29:02.573+13:002012-11-01T11:29:02.573+13:00I'd not heard of anybody hiking prices; I didn...I'd not heard of anybody hiking prices; I didn't see it, but I was stuck in the east from Tuesday through early Friday morning.Eric Cramptonhttp://offsettingbehaviour.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-11930107916725714522012-11-01T11:23:35.420+13:002012-11-01T11:23:35.420+13:00Unless rationing breaks the expectation of outages...Unless rationing breaks the expectation of outages, it'll just encourage folks to go from station to station to fill up.Eric Cramptonhttp://offsettingbehaviour.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-10946869440433798072012-11-01T10:28:06.213+13:002012-11-01T10:28:06.213+13:00This seems like an expensive and wasteful use of r...This seems like an expensive and wasteful use of resources at a time when helicopters and money are probably better spent on other relief efforts, and when rationing would, as Duncan suggested, be more acceptable to the general public.Latsnoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-31450570620761109012012-11-01T09:08:18.125+13:002012-11-01T09:08:18.125+13:00Well I guess that depends what you want to do does...Well I guess that depends what you want to do doesn't it? Or what you think you might have to do given the uncertainty of the situation. <br /><br />From what I heard some stations implemented rationing themselves whilst I know of one station where the owners had obviously put on their big boy pants that morning and increased the pump prices. Apparently not everyone was afraid of being vilified.<br /><br />I think it would be politically unpalatable to hike the duty in such a situation or for the government to be seen to mandate a higher price. Besides as you point out it was only a couple of days and the government had bigger fish to fry at that point.Duncannoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-66611822810100731232012-11-01T08:55:48.419+13:002012-11-01T08:55:48.419+13:00The tankers from Timaru were on deck for a couple ...The tankers from Timaru were on deck for a couple days later. How much petrol is essential to get you through a couple days? Eric Cramptonhttp://offsettingbehaviour.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-52132719488095616042012-11-01T06:43:59.209+13:002012-11-01T06:43:59.209+13:00I wouldn't expect that price hikes do much whe...I wouldn't expect that price hikes do much where people are prepared to sacrifice other spending in order to get what they consider essential. If we're going to assume people have unlimited time to sit in queues at different stations, can't we also assume they have unlimited funds with which to purchase petrol at expensive prices?Duncannoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-55096508113525591822012-11-01T02:21:03.327+13:002012-11-01T02:21:03.327+13:00yes, well I decided to start price gouging on my h...yes, well I decided to start price gouging on my home in Christchurch for the earthquake refugees renting. They didn't have to pay anything, their insurance companies did .<br />And we would supply home, and power, and wood, and internet, and so on but guess who did the gouging on the electricity and internet, and the wood., <br />And guess what it was like, as who stole things from the house and the dogs and animals who gouged out the wall in the house and guess how much we care about the refugees Christchurch Eastpeterquixotenoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-50817807433176505962012-10-31T20:58:25.959+13:002012-10-31T20:58:25.959+13:00Helicopter money drops?Helicopter money drops?Eric Cramptonhttp://offsettingbehaviour.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-46636683898920941802012-10-31T20:56:15.483+13:002012-10-31T20:56:15.483+13:00I'm saying there was a market failure that cou...I'm saying there was a market failure that could have been solved with a temporary price hike. Note that rationing doesn't do much where folks are willing to drive down the road to the next station after getting 20 litres.Eric Cramptonhttp://offsettingbehaviour.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-78868212819766688172012-10-31T16:19:24.427+13:002012-10-31T16:19:24.427+13:00"But the petrol stations knew that every sing..."But the petrol stations knew that every single customer would hate them <br />if they were the only station to let prices rise such that supply and <br />demand came back into equilibrium." Isn't that just capitalism in action? <br /><br />Are you calling for a government mandated pricing regime for petrol during emergencies? Anyway, I'm curious how you actually determine the 'market clearing price' in those sort of situations - I expect people will simply sacrifice other non-essential items to get the petrol (e.g. paying the power bill seemed a bit moot at the time), unless the price is really obscenely high. <br /><br />If you're going to have a co-ordinated response then surely rationing is simpler to implement and for people to understand - "everyone gets 20 litres" vs "I know it looks like we're screwing you over, but in reality we're simply charging a market clearing price to re-establish equilibrium". In those situations I think people are more accepting of rationing over price-gouging - it seems fairer. <br /><br />To steal a quote "people do what is most necessary to them at any given moment" and I think for a lot of people what was necessary in Feb 2011 was to have options and having petrol gave them options.Duncannoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-71029941950254105152012-10-31T16:12:03.755+13:002012-10-31T16:12:03.755+13:00I understand your argument Eric, but I still find ...I understand your argument Eric, but I still find slightly icky the idea that only those folk with sufficient disposable income should be able to source goods in times of emergency with unfettered gouging, especially with regard to staples like food and water. I have trouble with the notion that rich folk should be able to eat, and the poor be damned, even though I'd probably be counted as one of the aforementioned rich folk. I'd prefer the artificial intervention of rationing in this situation to the purer market driven outcomes.Latsnoreply@blogger.com