This is already happening: https://www.chicagotribune.com/business/ct-biz-n95-face-mask...
Also, US medical facilities and government already don't have a sufficient stockpile, so there will be shortages and they're talking about changing usage practices to conserve the supply. 3M, at least, has said they're going to prioritize medical customers, but they're not going to catch up until April, at least.
https://www.washingtonpost.com/health/shortages-confusion-an...
There's supply and demand, but then there's straight profiteering from a public health crisis.
Of course, there are other ways to achieve this effect: governments could order the mask manufacturers to step up production, or the manufacturers could take a gamble on the future and step up production before seeing an increase in sales (and a bank could finance that if cashflow was an issue). But you know, you wouldn't criticize the mask manufacturers for increasing production and thereby profits, so it's a bit harsh to blame the intermediaries.
No they're not. The profiteers are resellers that bought masks/respirators from the manufacturers at regular price, then sell them with a crazy markup.
I've been watching the prices of these items throughout this whole crisis, and the prices of 3M respirators sold through reputable retailers has not budged. 3M is not increasing them either:
https://news.3m.com/blog/3m-stories/3m-responds-2019-novel-c...:
> 3M has not changed the prices we charge for 3M respirators as a result of the outbreak
Not any more than legitimate customers buying the same masks. They provided no signal that 3M wasn't already receiving loud and clear.
Profiteers don't add anything to the situation except their parasitic markup. They misallocate scarce resources away from where they're needed, and those resources end up wasted either in their personal horde or in the hands of those who have more money than sense.
At first, the prices in the local market here were normal and people were buying hundreds of respirators and masks.
As prices have been driven up (almost exclusively this profiteering and parasitic markup, big retailers have not increased prices), people've been buying closer to what they feel they need rather than trying to stockpile -- when the mask is $2, it's easy to grab 50 or 100. When they're $25 people are only buying 1 or 2.
Gross as it is, this is serving some good -- it's helping to distribute the available inventory over a wider population, instead of concentrating it with the few people that are stockpiling them or exporting them.
One point here, which I think I established previously, is that price movement provided no useful information to the manufactures. The most useful information came directly from institutional medical customers (who were the first to know), not retail profiteers working off of secondary reports in secondary markets.
> As prices have been driven up (almost exclusively this profiteering and parasitic markup, big retailers have not increased prices), people've been buying closer to what they feel they need rather than trying to stockpile -- when the mask is $2, it's easy to grab 50 or 100. When they're $25 people are only buying 1 or 2.
> Gross as it is, this is serving some good -- it's helping to distribute the available inventory over a wider population, instead of concentrating it with the few people that are stockpiling them or exporting them.
However, the profiteers are stockpilers, and they probably stockpile more extremely than even the most aggressive personal-use stockpiler.
For example, looking at it from a pure profiteering standpoint: it's good business if I can buy 1000 masks for $1 each and sell 100 for $20 each during the crisis, I just doubled my money. However, I just wasted 900 masks in the process, from POV of society. Profiteers are panic-driven speculators, and their economic interest is to make wasteful decisions (otherwise they're potentially leaving money on the table). When the crisis is over, they can just unload their (wasted) inventory at the normal price (for instance, by taking advantage of a retailer's return policy).
Also, like TeMPOraL noted, the profiteer's speculative buying could fuel the panic that caused those 100 sales of $20 masks. The signal of empty shelves may be false, or falsely magnified. It's kinda like cornering a market, in that regard.
You also assume people are willing to deal with the profiteers. I don't think that's necessarily the case, especially at a 500-2500% markup. For instance: I'd refuse to buy from a profiteer out of principle, and either live without or use alternatives.
This kind of profiteering is a pretty clear market failure, not an example of the market providing benefit. It's a failure just like government warehouse steering essential supplies away from first responders and the public and towards government elites.
I might have been willing to buy 100 masks for my family at $1/piece (which is roughly for what they sold initially, perhaps even less if I looked harder). But I'm not willing to buy 5 masks at $20 apiece, because there's no point. These masks are disposable, single-use items that cause more risk than they reduce if you wear them for prolonged amount of time (or repeatedly take off and on), so it only makes medical sense to buy them by either by the hundreds, or not at all.
Which means no masks for my family now.
The trouble is that unlike in the perfect world we wish the market worked in, the most deserving are not always the best funded. So it would probably be more ethical for either 3M or the "price gougers" to offer some sort of preferential pricing - although deciding who to offer it to might be tricky.
Perhaps, in an ideal world, the government is competently in charge of any urgent social emergency, and if resources are required the government can pluck them out of any incipient market bubble by gently requiring that the entire stock be sold to them, at a fair market price.
No. Raising prices is the econ 101 solution, but we don't live in an econ 101 world. There are other ways to deal with shortages, and 3M chose one of those other ways:
https://news.3m.com/blog/3m-stories/3m-responds-2019-novel-c...:
> We notified 3M authorized distributors that we are prioritizing orders to help serve our base business – including hospitals – due to high global demand.
Some retailers are also implementing non-price-based solutions to the shortages:
https://www.ajc.com/news/home-depot-limits-coronavirus-mask-...:
> As fears continue rising about the deadly coronavirus outbreak, Atlanta-based The Home Depot is limiting the number of protective respirators to 10 per purchase.