The Daily Caller

The Daily Caller

Guns and Ammo, Supply and Demand (and why price gouging is good)

By Jorge Amselle

No one likes to overpay for something or feel like they are being taken advantage of. Right now the prices of guns and ammunition have doubled and tripled, driven entirely by panic buying. In some places there may be good reason to panic. Several states including Connecticut, Hawaii, Massachusetts, New Jersey, California, Illinois, New York, and locally, D.C, and Montgomery County, MD, have a variety of restrictions on ammunition purchases. These can include requiring ID, mandating special licensing, and restriction on mail orders, etc.

However, for the rest of America, the price hikes are the result of hoarding and not as some people believe government purchases. After all the Feds are not stockpiling .22 LR and good luck finding that at a reasonable price. Since manufacturers have not raised their prices and have ramped up production dramatically the obvious cause of the price hikes online, at gun shows and in many gun shops must be as a result of greedy and opportunistic retailers hoping to cash in.

Well to quote Joe Dirt, “it’s a business, it ain’t UNICEF.” Or if you prefer I can paraphrase Adam Smith who wrote that the butcher and baker don’t provide you with meat and bread out of the goodness of their heart. It is the nature of business to maximize profit, and you can’t blame them for that. But consumers still don’t like it so many retailers don’t raise their prices. Instead they are rationing supply.

Limiting customers to one or two boxes of ammunition each seems like the fairest thing to do. It is egalitarian. It is democratic. It is stupid, inefficient and it doesn’t work. Rationing goes against the laws of supply and demand while price gouging does not. In fact there is really no such thing as price gouging, merely there is setting the market price at the point where the demand and supply curves meet.

Price gouging allows for the most efficient allocation of limited resources and actually benefits the consumer. If a box of 50 rounds of 9mm sells for $12 then there are going to be a lot of people buying it. If it sells for $70 there will be far fewer people buying it. At the lower price people will buy it even if they don’t really need it. They will but it to hoard it or just because it is cheap. At the higher price only those who really and desperately need it will buy it.

Of course there isn’t enough ammo to go around at the lower price so stores who don’t raise their prices ration supply. But if you desperately need 1,000 rounds for a competition or other event you will end up spending a day or two driving from store to store looking to buy one or two boxes of rationed ammunition at a time until you have what you need. Did you really save any money? Of course not. Instead of just buying what you needed at a higher price at one store you spent even more money in terms of your time, and gas, trying to secure what you needed at multiple stores.

As soon as people feel they have enough ammunition and the panic buying stops then stores will be able to keep a suitable supply, demand will decrease and prices will go back down to normal. Let the desperate people overpay and let the rest of us wait.

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Jorge Amselle is a firearms instructor and writer covering all aspects of the industry from military and law enforcement firearms and training to the shooting sports. His youtube channel http://www.youtube.com/amselle.

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