New answers tagged price
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What you are trying to do here is estimate the demand curve of a firm. Broadly speaking, even if you got data on price and quantity, you would not be able to estimate this because your right-hand-side variable (quantity) is also determined by the supply curve. This is what people call the 'simultaneity' form of the problem of endogeneity.
The way to ...
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As a first pass, it's helpful to think about the basic ideas of surplus, and I'm surprised that no one has discussed this aspect of the question yet. It is a basic fact, one that we learn in our intro to economics that the market-clearing price maximizes total surplus: consumers with the highest valuations for the product obtain it. Crucially, the mechanism ...
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There is a behavioral literature that warns against `price gouging'. Two Nobel Prize winners, Richard Thaler and Daniel Kahneman, conducted surveys with Jack Knetsch. They report that 82% of survey respondents say that raising the price of a snow shovel when a snowstorm is approaching is unfair.
The reasoning is based on Thaler's concept of 'transaction ...
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There are no laws against "price gouging" where I live, at least the price of medical masks has increased 3-10 fold in the recent weeks, due to the coronavirus outbreak.
Yet there is still a shortage of masks. (Also several other things.) Why is this? You write that in the absence of price gouging laws
Supply would increase. Increased prices signal ...
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Actually economics does not even officially use term price gouging. Your analysis is right, actually economists dislike anti-price gauging legislation for this reason.
For example, when the IGM panel of top policy economists were asked about one piece of price gouging legislation in the US, vast majority disagreed with it:
However, an important caveat to ...
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