F98735F5   
   From: calvin@remove.daxack.ca   
      
   hancock4@bbs.cpcn.com (hancock4@bbs.cpcn.com) said...   
   >   
   >The "yield management" system may be how the prices were developed, but the   
   >end result to the consumer was price gouging.   
      
   People love to scream "price gouging" when something is in short supply   
   due to an unusual event. The fact of the matter is that if prices were   
   held low, there would be some very serious problems, possibly leading to   
   deaths.   
      
   Consider a scenario where some disaster has resulted in no clean drinking   
   water. Stories of shops selling a case of water, that normally sells for   
   about $2, starts selling them for $20. Cries of "price gouging" occur.   
      
   Here is what happens when the price is left at $2...   
      
   A customer in search of a case of water finds the normal price in effect.   
   Does he purchase the case he was looking for? No, he purchase three or   
   four cases just in case. So does the next customer and those that follow   
   until the store is out of cases of water. The dozen or so customers have   
   the water they need and then some, as they have wiped out the 200 or so   
   cases that the store had. All remaining customers needing water be damned.   
   Getting new stock takes time, even with expediting an order from the   
   supplier. Extra charges will likely apply to get it shipped faster.   
      
      
   Here is what happens when the price is changed to $20...   
      
   That first customer arrives to find such an "outrageous" price. However,   
   he doesn't want to spend more time than necessary to look for something   
   better and purchase the case he came for. Pretty much the same occurs   
   for the next 200 or so customers, and they ALL go home with a case of   
   water. Word gets around and a shop owner 100 miles away, with a stock   
   of 300 cases sitting around decides to load most of it in a van an drive   
   to the problem area with dollar signs in front of his eyes. When he gets   
   there, he finds that a few dozen other enterprising individuals had the   
   same idea. However, once the first of those got there and started selling   
   water for $20 per case, one of them put up a sign that said $18.   
      
   Most of the others made their own signs pretty quickly, but one of them   
   made one that said $17. In changing their signs, someone else set their   
   price at $15, and the guy who just arrived though to himself that his best   
   bet at making a quick buck by selling them for $12. It doesn't take long   
   before the price dropping slows down around $3 or $4, and when very few   
   are searching for water to drink, any one who came with water who doesn't   
   want to haul it back with them will sell off what remains for $2, or even   
   less.   
      
      
   One may think of raised prices on goods needed in an emergency as "price   
   gouging", but call it what you want, it encourages goods to be moved   
   quickly by individuals and results in the prices returning to normal   
   in a timely matter.   
      
   Why is it so common for prople to scream "price gouging" when shops raise   
   prices in emergencies, but very few complain of those that hoard goods   
   that are in short supply when the price was not raised.   
      
   Which one is really going to deprive people in need?!?   
      
   --   
   Calvin Henry-Cotnam   
   "Unusual or extreme reactions to events caused by negligence   
    are imaginable, but not reasonably foreseeable"   
     - Chief Justice Beverley McLachlin, May 2008   
      
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