Why Higher Prices Aren't Always Bad

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Why Higher Prices Aren't Always Bad

Post by DeweyHales on Wed Jun 12, 2013 1:53 pm

There are two towns, Freedomville and Kovachistan, several hours inland from the beach.  A hurricane is approaching and citizens are forced to evacuate the beach towns.  So, the beach dwellers head to these two towns' hotels.  In Freemdomville, hotel prices go up at numerous places when word of the evacuation happens.  In Kovachistan, the prices are fixed so that no one gets gouged. 

Hotels in both towns start to fill up.  In Kovachistan, the first arrivals decide with the low prices to get a pair of rooms for each family.  One is for mom and dad, and the other is for the kids.  In Freedomville, families at the less expensive hotels do the same.  As the less expensive places fill up, families share rooms because of the prices.  In Freedomville, everyone gets a room.  Some are more crowded than others, but everyone is safe and dry with a place to go to the bathroom.  In Kovachistan, there are no rooms left for later arrivals.  These people are forced to sleep in their cars and go to the bathroom outside because of a shortage of rooms.   

If Kovachistan had not held prices artificially low, matching a supply and demand condition that no longer existed, people could have had rooms.
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In Real Life....

Post by spursnguns on Wed Jun 12, 2013 3:45 pm

The government taxed everyone to the point that no one could afford the hotel rooms.
The government confiscated the empty hotel rooms, planning to give them to the people for free.
Due to government mismanagement, the free hotel rooms were never distributed.
Everyone died.
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Re: Why Higher Prices Aren't Always Bad

Post by STEVE SAMELAK on Wed Jun 12, 2013 7:12 pm

but they got free phones & in the end it was someone else's fault
let me be clear
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Re: Why Higher Prices Aren't Always Bad

Post by Rob Kovach on Wed Jun 12, 2013 7:27 pm

This is the greatest thread ever!  Laughing
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Another town

Post by FredB on Thu Jun 13, 2013 12:12 am

And in a third town, Communityville, near the other 2, everyone decided to pitch in and help the unfortunate people displaced by the hurricane. They opened their homes and made sure that everyone who needed it had a place to stay. Everyone was happy, including the hotel owners who had full occupancy at their normal (non-gouging) rates.

There are many models of how people deal with scarcity, not just the artificially limited two choices from Economics 101. And most advanced economists will tell you that people, being as complex as they are, do not make decisions on a purely supply-and-demand basis. All kinds of other "irrational" factors enter into economic decisions, including personal preference, sunken cost considerations and a sense of right and wrong. Which is what Rob was talking about.

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Re: Why Higher Prices Aren't Always Bad

Post by Rob Kovach on Thu Jun 13, 2013 12:22 am

Great points FredB...and a funny thing happened in the months following the hurricane.  Communityville saw a marked increase in occupancy rates as previous visitors to Communityville returned to visit the people they met during the hurricane.  They were all so nice that the towns people and the visitors had become life long friends.  The beach people visit and spend their money in Communityville frequently now.

Oh, and Dewey, Kovachistan didn't hold the prices artificially low.  Each business freely chose to keep them that way.
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Re: Why Higher Prices Aren't Always Bad

Post by STEVE SAMELAK on Thu Jun 13, 2013 7:52 am

It appears to me that the "shooting community" (not necessarily gun owners who don't shoot) is a generally helpful & generous group.
I've seen competitors lend a hand, gear, ammo, support, to fellow competitors they would not normally give the time of day to.
These are strange & trying times...but they've been worse.  We will get by and prosper.
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Re: Why Higher Prices Aren't Always Bad

Post by WVBE Shooter on Thu Jun 13, 2013 10:40 am

The hotel owners could have limited the purchase of one hotel per family as way to make sure everyone received a little help.  Wait I think that responsible suppliers like Midway USA are doing this as well at a reasonalbe price.  Wow I think I will purchase products from Midway USA again.

Just one question, which city did the Zombies attack first?

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Re: Why Higher Prices Aren't Always Bad

Post by spursnguns on Thu Jun 13, 2013 11:30 am

WVBE Shooter wrote:Just one question, which city did the Zombies attack first?

Washington, D.C.

About 5 years ago. Surprised
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Re: Why Higher Prices Aren't Always Bad

Post by DavidR on Thu Jun 13, 2013 12:02 pm

And in both towns Cheaper than Dirt sent everyone a 10% off coupon to buy their  amscor 22 ammo which was on sale for 199.00 a brick, and everyone lived happily ever after. Laughing
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Re: Why Higher Prices Aren't Always Bad

Post by DeweyHales on Thu Jun 13, 2013 4:21 pm

Point taken, Rob. I'm glad you've got a sense of humor.
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Re: Why Higher Prices Aren't Always Bad

Post by Rob Kovach on Thu Jun 13, 2013 6:31 pm

Dewey, thanks for this thread--it really lightened up that debate that we had on the other threads.  I also wanted to give credit to the following comments for me laughing loud enough at the computer that my wife was annoyed:
The government confiscated the empty hotel rooms, planning to give them to the people for free.
Due to government mismanagement, the free hotel rooms were never distributed.
Everyone died.

but they got free phones & in the end it was someone else's fault
let me be clear

Just one question, which city did the Zombies attack first?

And in both towns Cheaper than Dirt sent everyone a 10% off coupon to buy their  amscor 22 ammo which was on sale for 199.00 a brick, and everyone lived happily ever after.
 
 
All really great comments everyone!
 
Dewey, at Camp Perry, come find me in the huts and I will give you a cold beer.  We will have a flagpole with Old Glory, and a Wisconsin State flag next to our hut.
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Re: Why Higher Prices Aren't Always Bad

Post by spursnguns on Thu Jun 13, 2013 11:37 pm

Rob Kovach wrote:All really great comments everyone!



Good stuff gents!

This subject is better discussed with a beer in hand. Good luck to all.

Jim
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Re: Why Higher Prices Aren't Always Bad

Post by DRNurse1 on Sun Jun 16, 2013 1:51 pm

I reread an interesting trilogy recently 'The Foundation Trilogy' by Isaac Asimov. Interesting perspective on how folks behave in groups and individually. As a group, we will certainly navigate these times, however individual decisions during this period (Cheaper than Dirt vs Midway) are going to affect things long after the shortages abate.

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