Saturday, August 23, 2014

price gouging and overcharging.1.

i'm just jotting down what i think i'm seeing. these are 2 behavious that are curious and undecipherable to me.

price gouging

1. we're ok with the demand/supply way of setting prices.

2. usually people accept how it works. more demand or less supply, ceteris paribus, higher price. vice versa.

3. but often during events such as natural disasters, such behaviour is often labeled 'price gouging'. sometimes there are even laws against it.

over charging

1. when buying air tickets or booking hotel rooms its commonly accepted that prices are going to be different depending on when you purchase.

2. people negotiate prices all the time. like when they go buy antiques. or art. or property. or second hand cars. many people like to ask for discounts too.

3. i believe its usually called price discrimination.

4. but when we buy a thumbdrive at simlim shop A for $30 and find that shop B and C are both selling the same thumbdrive for $10, we call that a rip off. or over charging.

5. or when a caucasian buys bbq lobster at x5 the price that the locals pay.

what are the rules that govern when pricing by the demand/supply model is ok and when its not? what are the rules that govern when price discrimination is ok and when it is not?

from Lizard's Ghost

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