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Message Subject Human survivability with supply chain disruptions and its effect on populations
Poster Handle Anonymous Coward
Post Content
Wait...you're saying profiteering is good in a crisis?

Some of you may be repelled by the notion that a merchant offering supplies or services should be able to charge more in a crisis. Here's why it's a good thing.

You go to certain grocery stores today. Often you go there because they're conveniently located near your neighborhood and this means less time and fuel for you as a consumer. If there were two that were equally distant, but one had better selection or prices or better meat or produce, then you go to the place that features the qualities and quantities that you need.

In a collapse, if prices rise, then people will pay the higher prices, but then they're upset if the price variation exceeds a certain range. Demand drops, particularly since they're been made upset by the merchant and they go to another store.

If no supplies are coming in, then people are willing to pay more for the same goods. Think about seasonal produce like fresh peaches. They're not always available, so prices must be adjusted based upon the demand and the supply of them. If it's a favorable trade, then the consumer adjusts the importance of acquiring them versus the cost of them. Since fresh peaches spoil, a merchant who has too high a price on them will reduce the prices if no volume of them are being sold. This kind of market forces allow for a reasonable price to be found by negotiation between the supplier, wholesaler, retailer, and consumer.

Yes, hotel prices might go sky high in a disaster, but then maybe they have a very small percentage of rooms occupied during the period or later when no one has money for them. Since an owner must still pay for utilities, employees, and advertising, then they adjust the price based upon the ability for them to make a profit. In an economic crisis, it's very possible that there's a very slim window to make money at all, for maybe once it happens, it ultimately ruins the merchant within a few months. In a disaster, there's not exactly a lot of incoming travelers visiting the area for sight-seeing, is there? The only niche markets for them are journalists and government workers visiting the area.

Here's how it could become very worrisome. In an economic collapse, the competition between merchants will become very strained. Some merchants may not have ways to sell their goods. Others can't get supplies. Others have no employees because they can't pay their salaries. This reduces competition to the degree that monopolies are created. If there's a monopoly on fuel, then a merchant can set the prices as high as they want, and only leadership can step in to limit their profit by creating a restriction, imposing limitations, disallowing government contracts, regulating trade, etc.

However, if there's no competition, usually some merchant will attempt to go into business since they see an opportunity. They'll begin to network to find suppliers, wholesalers, transporters, and then market their goods to the consumer. Sometimes this lowers prices., it depends upon supplies and inflation.
 
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