In the last few weeks many businesses and business people have taken over the market of certain products. Products like hand sanitizer, Clorox wipes, and masks have risen up to 20 times the normal retail price. Many people saw the opportunity to make profit as the demand of these products were high and the supply was very limited, and bought thousands of bottles of hand sanitizers and other products. A bottle of hand sanitizer that would usually cost $5.00 would be marked up to $30.00 and sellers of these products would make thousands of dollars in profit. In the article that I read, a man bought many small bottles of hand sanitizers for a dollar a piece, and sold each of then for $20.00, making a huge amount of profit. On top of the $20.00, Amazon also charges an additional of $10.00 to compensate with the handling and fees.
In some locations, businesses have taken action so that everyone has an opportunity to buy some hand sanitizer. Stores in Denmark have taken action to limit hoarding by making hand sanitizer progressively more expensive the more bottles of hand sanitizer someone buys. The first bottle would be around $5.00 where as the second bottle would be $143.00.
As the sanitizer scheme progressed, Amazon, eBay, Walmart, and other online commerce websites have attempted to suspend the amount of profit these sellers are making by limiting the price in which they can list at. However, many sellers saw this as only an obstacle and continued to sell their products locally instead of online.
Although many sellers are probably enjoying their heyday, many businesses including hospitals are struggling to maintain a sanitary environment. With other people hoarding thousands of bottles of hand sanitizers and masks, hospitals have begun to run out of supplies, and have taken action by rationing.
1. Does high demand for items like hand sanitizer and masks during a public health crisis justify higher prices?
2. Is it immoral for those to stockpile on supplies that are necessary for everyone?
3. What precautions would you have taken to limit the amount of hoarding?
8 comments:
In Mankiw there was a side piece about how, in the face of a crisis (like a hurricane or pandemic), demand for many goods goes up and supply goes down, which causes prices to go up. The piece describes how this is a natural part of the invisible hand at work and that the government interfering to lower prices might not really be benefiting anyone. Most times the crisis itself doesn't cause the price gouging (caused by supply shortages, caused by an increase in demand), its people buying up before and during it. As of now, necessary supplies to keep clean and healthy, are on a first come first serve basis and that just isn't right (especially since the first to buy are usually the first to stockpile). If the price of a bar of soap naturally rises to $20 people will hoard less soap, but if the government keeps the price at a few bucks people will buy it up in amounts they will never use and no one else will get it. That being said, while no one likes the higher prices and many people doing, what seems like, unethically profiting off them, they are simply a part of the natural laws of supply and demand (prices goes up, more people want to sell it). On that note, the government should focus on helping everyone (especially those who are already struggling without a crisis) afford these goods from the start, rather than unnaturally skewing the prices.
I think that it is very immoral for people to stockpile on items that are necessary for everyone during this pandemic. It was a bit surprising to see people suddenly start hoarding toilet paper, but to each their own I guess. By hoarding these necessary supplies it leaves families who typically buy these items in bulk because it's much cheaper at a disadvantage. In the NYT article they mentioned two brothers who realized that demand for hand sanitizer was high and supply was limited. They decided to drive around collecting hand sanitizers and antibacterial wipes from all of the stores in their area buying them for cheap only to resell them at a much higher price therefore making profit for themselves. I think this was absolutely despicable and the fact that they prayed on people's emotions of fear and panic just to make a profit for themselves is disappointing, but feeds into the capitalist society we have. However, I believe that more and more states are enforcing their price gouging laws so hopefully this should help.
As for precautions I would've taken I think grocery stores are doing great in now putting a limit to certain items and for the people who have already bought tons and tons of items to stock up and then resell I know Costo has stated that they would not be giving any refunds on return of rice and toilet paper and there might have been more that I didn't mention. However, as Benji stated above I think that the government should be focusing more on helping everyone afford these necessities during this time (and just in general!)
On a side note, hopefully everyone is staying safe and healthy!
I understand people's panic and that everybody wants to have enough of necessary or desired items, so they have been stockpiling, but I think in the long run, it hurts everyone. Not only is it immoral, its actually hurting oneself too. To stop the spread of Covid-19, doing little things like washing your hands and not touching your face is important. If we all focus on ourselves, we should be able to slow this pandemic. However, if you stockpile on soap, this stops other people from being able to wash their hands. Yes, the only thing you can do personally to stop yourself from getting sick is wash your hands, but if you are preventing others from washing their hands, they are more likely to get sick and therefore more likely to get others sick, or even you sick. By buying large amounts of soup, hand sanitizer, and wipes, you are making it harder for the entire community, including yourself to stay healthy. We all need to get the amount we need and leave the rest for other people like us who need to stay healthy in order for these preventative methods to work. Furthermore, if we are taking these supplies from the people who need them, our doctors and nurses who are in direct contact with people that are sick, if you were to get sick and need a doctor, they might be out sick because everybody hoarded supplies and they weren't able to protect themselves. Please everybody, even when we're panicking, let's help those around us.
I don't think that a global crisis is the time for businesses to up their profit; this whole situation is extremely stressful already, and with people hoarding supplies they definitely don't need, places that do need them (such as hospitals) are going to suffer, and therefore so will the public. This is incredibly concerning and frustrating to me. I think that these companies should be helping the public rather than trying to get lots of cash off of them. I also do think it is immoral for people to be stockpiling at this time; there are tons of people in need of products that are now out of stock due to people panicking and acting irrational. People can't even get toilet paper anymore because everyone is acting as though this is the end of the world. More people will suffer than if everyone acted rationally. This is especially difficult for the elderly community, the people who are most likely to be affected/die from the COVID-19 virus. They have to isolate themselves, and if they do risk their health to go purchase amenities, they won't be able to find any! Please please please, if your family is participating in this behavior, do something to fix it because it is only causing more hurt.
-Olivia Ladizinsky
Higher demand should not justify higher prices. I understand that suppliers need to make a profit, and that an increased demand is the perfect opportunity to do that, but these products are necessities and should be affordable to all people that need it. Items like hand sanitizers and wipes not only protect the consumer buying the item, but the people around them as well. By keeping germs at bay in shared areas, everyone has a decreased likelihood of spreading the virus. In a time when we as a society need to flatten the curve, one person's gain is society's gain too. So, instead of hoarding all the items and attempting to profit off of them, consumers should just buy enough to last them a few weeks and leave some for others, so that everyone can help keep the virus from infecting more people. It works to the supplier's advantage as well, as the supplier has a lower likelihood of contracting the disease from the general public if everyone is armed with cleaning supplies.
Higher demand shouldn't justify higher prices during a crisis and for things that everyone needs about the same amount of.
While selling supplies for higher prices will limit hoarding, companies can easily set limits on how many supplies one can buy to limit hoarding without forcing everyone who wants toilet paper to give their wallets up to greedy slumlords. It's obviously immoral to knowingly hoard more corona supplies than you need. People buying supplies in bulk to price gouge during the pandemic deserve prison and should be treated like price gouging companies. Amazon could've easily earned more money and a PR story by offering to reactivate the hand sanitizer dealers' accounts if they sold all of their hand sanitizer back to them at the original price.
While resellers caused a large chunk of the damage caused by hoarding, the rest is caused by panic buyers who don't know how many supplies to buy. While the economy tanks and the disease spreads, people are worried about losing their jobs and not being able to go outside. In a situation like this, it's unreasonable to expect people to behave rationally and not risk buying too many supplies out of concern for society. Companies could've easily worked with the CDC to calculate how many supplies everyone is going to need and limit everyone to that amount. If only companies would choose to risk not selling all of their supplies for the sake of public health.
Personally, there isn't much I can do to prevent hoarding other than not buying too many supplies and social distancing to stop corona from spreading. If I were an adult with a family I'd also buy more supplies than my family needed because very few people know or care about how many supplies they'll need.
I think a change in price for hand sanitizer at the time is a very smart business decision for those companies, especially if the demand for them are so high at the moment. It may be inconvenient to us as a society but it all depends on how the company wants to profit off this pandemic. I can understand why people are trying to stockpile at this time. Our society is slowly shutting down because of the virus and people don't want to leave the house to catch the virus so they are stocking up on food and supplies. It may be inconvenient for all of us but I understand the justification behind the hoarding. To limit this, however, we could have a limit at grocery stores for a certain product. So when someone is trying to grab a large amount of a single product the cashier can limit their amount to something more reasonable.
During a public health crisis, high demand for items that are essential for one’s safety and wellbeing shouldn’t be so inaccessible as a result of high prices, however as many have pointed out, this isn’t entirely the business’ fault. Based on what we’ve been learning in econ and how supply affects demand and vice versa, these businesses are responding naturally to this crisis by matching higher demand and a limited supply with raising their prices; because the supply curve didn’t really change at the onset of the coronavirus outbreak but the demand curve did shift because of a change in people’s taste for products like masks and hand sanitizer, price naturally increases. At the same time, however, this increase in price is putting people’s wellbeing in jeopardy. Some businesses have recognized this and begun to put limits on the amount of items one can buy (I know Costco only lets customers buy one bundle of toilet paper per customer) but it’s kind of sad that it’s gotten to that point. People who are hoarding are also in the wrong here because they play a part in depriving people of essentials. This is also incredibly wasteful, as I can’t imagine that the mass amounts of food people are buying aren’t going to spoil before they can even be eaten. Fear, uncertainty, and confusion make people do irrational things, and while I can sympathize with their worries, we need to remain mindful that we are in this together.
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