Seems like HFT in the real world. What did hft defenders always say? That they are just liquidity providers, right? But no one says there is a need for this extra liquidity. I wonder whether regulators will ever target this.
The fact that scalpers can sell the consoles for a much higher price shows that there is no market equilibrium with respect to the prices that the console vendors set. To achieve this, console producers could choose two strategies:
a) increase production
b) increase prices
a is impossible because of chip shortages, so b would be the way to choose to achieve "supply = demand" (i.e. everybody who is willing to pay the market price will get a console). Since console producers are not willing to do this move (perhaps for "marketing reasons" à la "our console is this cheap"), scalpers will make use of this market inefficiency, and ensure that the prices are those where there is a market equilibrium.
So, scalpers change the situation from "there is more demand than supply" to "supply = demand", making the market balanced.
Thus, the existence of scalpers is rather are sign that the console producers chose a price that is too low. The existence of scalpers is thus a mere symptom of the bad pricing decision of the console producers.
I don't see how this solves the problem: what prevents the people who want their iGadget faster paying a larger price to a scalper?
> But being able to put your money down today and see that your new iShiny will be delivered in 6-8 weeks helps mitigate FOMO
As far as I am aware, there do exist (even quite some) vendors who offer the option of paying immediately and sending you the new XBox or PlayStation as soon as they get their delivery. This is a queuing system.
>> > But being able to put your money down today and see that your new iShiny will be delivered in 6-8 weeks helps mitigate FOMO
That is my answer.
> As far as I am aware, there do exist (even quite some) vendors who offer the option of paying immediately and sending you the new XBox or PlayStation as soon as they get their delivery. This is a queuing system.
The difference between those and what Apple is doing is that Apple gives you fairly accurate estimate on when your iShiny will ship, and Apple prioritizes their direct to consumer inventory to make sure those ship times remained reasonable even for their most in demand products at the height of the silicon shortage in 2021. Most of the online stores I've seen offering queues are smaller retailers without enough pull to get consistent inventory from manufacturers, and being the only sellers offering a queue at all meant they got flooded with more orders than their meager allotments from those manufacturers could ever hope to fulfill.
Alternate character interpretation: these companies understand that this is a reasonably sustainable price for their customer base, that moving away from those "bad pricing decisions" will alienate their customers, and that scalpers should be put in trash skips and rolled down steep hills.
Not every profit need be maximized immediately and without hesitation and scalpers need not exist. More than one thing is allowed to be true.
It's not sustainable. It's being sold for too low relative to demand, so they would all just be sold out at that price. The scalpers don't change the supply.
>that moving away from those "bad pricing decisions" will alienate their customers, and that
The customers can choose to be irrationally angry about whatever they want.
>scalpers should be put in trash skips and rolled down steep hills.
What is all this anger for? We're not talking about scalping food and water here. These are skinner's boxes. Time wasting machines. It's all just a locked-down waste of silicon that will not be reused and in another ten years everyone will be throwing their PS5s out for a newer console that does the exact same thing.
You want a PS5? You want an Xbox? Buy a PC with integrated graphics. it's the same damn thing, except it will actually be useful for something after you're done playing games on it.
>Not every profit need be maximized immediately and without hesitation and scalpers need not exist. More than one thing is allowed to be true.
It doesn't matter what your opinion of scalpers is. So long as people misvalue things on the open market, there will be traders ready to make a quick buck off of their ignorance.
> The scalpers don't change the supply.
They control it, they constrict it -- how would you describe it?
> So long as people misvalue things on the open market, there will be traders ready to make a quick buck off of their ignorance
It's not an open market -- it's been/being manipulated (trivially, apparently) by the scalpers to suit their ends.
What is the true value that the people are ignorant of? Why do you think there is such a discrepancy?
How is "making a quick buck" by conning the ignorant morally justifiable? How does it add value to society?
They buy an undervalued commodity and resell it at its "true" market value. They hardly restrict the supply: if they fail to get rid of their inventory, then that becomes a loss for them.
>It's not an open market
It is an open market, anyone is free to trade the commodity. When you have a centralized entity limiting who can trade and enforcing price controls, that's when the market is no longer free.
>it's been/being manipulated (trivially, apparently) by the scalpers to suit their ends.
How is it manipulation? They're just buying and reselling a commodity. Are you implying that the people buying from scalpers are being manipulated into making an uninformed business decision? I think the people buying from scalpers understand what they are doing, regardless of how it might anger you that you've been priced out of the market.
It's truly a free market. If the consumers decided that the value of the commodity is less than or equal to MSRP, then no one will buy from scalpers. The traders bear the costs of redistribution and the risk associated with keeping their inventory, so they would certainly lose money in that case.
It's ultimately the consumers that decide to enable scalping, the consumers decide for themselves how valuable the commodity is.
>What is the true value that the people are ignorant of? Why do you think there is such a discrepancy?
As the other commenters here have discussed, the price at which the manufacturer is selling at is misaligned with the supply/demand equilibrium for their commodity. Why? because the assumption is that a higher MSRP will anger their long-standing customers. So the manufacturer is forced to act ignorant to the forces at play (by people like you I suspect, who try to ascribe "morality" to the actions of individuals at the expense of the bigger picture).
This current environment creates a system of adverse incentives which profits the trader at the expense of the manufacturer. If the manufacturer increased prices, they could put some of that capital towards increasing production capacity, they could spend that capital on R&D, they could use that money to subsidize the entry cost for future consoles. Those are all things that and ultimately help the consumer as opposed to some weird third party who has to step in and stabilize the market.
>How is "making a quick buck" by conning the ignorant morally justifiable? How does it add value to society?
Traders propagate price signals and cushion volatility. They usually do so at a significant risk in return for razor-thin profits, because the value they add is usually low. It's only in cases of extraordinary mass ignorance that traders can profit so much by doing so little.
One might also ask how a fox "making a quick meal" out of a rabbit benefits the system of nature. The forces of nature care not of the woes of an individual, nor do the forces of the free market. Just as predators regulate the population of prey within nature, traders regulate the price signals of producers within society.
>What is all this anger for?
This is the type of reasoning that ultimately enables the dysfunctional forms of communism. It all goes back one's willingness to moralize over the actions of individuals without respect for the larger incentives at play.
It's nothing specific to recent supply chain disruptions. The problem is that manufacturers have relatively inflexible capacity. Scaling foundry capacity isn't as easy as scaling cloud resources; they can't just decide to produce 10x as much product in a given month. Simultaneously, these are status goods for which consumers place a high premium on having the latest and greatest. Even with perfectly functioning supply chains, the market price for such goods is always going to be high on release and taper off as supply increases.
What service?
> Pay $200ish over MSRP and all the headache of locating and securing one goes away.
They create the headache in the first place.
Do you also think a protection racket provides a service? If you pay them for protection, all the headache of your business being firebombed goes away!
Trying to regulate away this problem will just lead to more "innovative" scalpers.
if anything microsoft's plan of offering two sku's lowering the price has been more effective
How's that? If that's what people are already actually buying them for, then people can already afford them.
Supposedly, the world is more complicated than some stuff you picked up from Econ 101.
Imagine if, to get the latest gadget you had to queue outside a store for 30 hours - but you could hire someone to queue for you.
Theoretically one could argue the scalpers are queuing so you don’t have to.
Only if the console wouldn't completely sell out every time without the scalper. But it would.
So the scalper provides a service to consumers with more money by allowing them to avoid the hassle of competing with lower classes for popular goods.
I don't think this is true. The fact that scalpers are still buying consoles means they're still selling them. That means if the scalpers didn't exist consoles would still be sold out, it would just be individuals following twitter accounts to spam refresh for a single console instead of 10.
Keeping you from having to constantly try and ram through the checkout on a moments notice and still not get the product in the vast majority of attempts.
>They create the headache in the first place.
They would be completely sold out even without the scalpers. The scalpers are selling them to somebody -- that somebody would have just bought at MSRP and you would still have to do what I mentioned above.
>Do you also think a protection racket provides a service? If you pay them for protection, all the headache of your business being firebombed goes away!
This is a pretty ridiculous characterization, even if you don't like what scalpers do. You are not being forced to buy a PS5. You're not even being forced to buy a PS5 from them. You can pull up a restock stream and watch it like a hawk if you have the time. They're not engaging in violence against you because you didn't buy a PS5 from them.
They’re rent-seeking leeches that exacerbate supply issues.
They’re not providing a service; they’re interfering with our ability to engage in free exchange with retailers and manufacturers, and doing so through deceptive, dishonest, and immoral practices.
You're going on about how scalpers are abusive, deceptive, dishonest, immoral, rent-seeking leeches and are refusing to engage with the reality that their existence doesn't change anything other than giving you the option to pay $200 and skip the bullshit. I'm not asking you to like them, I'm just telling you that not much would be different if they were gone.
If I force my way to the front of the queue at every store in town, evade purchasing limits, buy all the baby formula before anyone else can, and then offer to sell it at a premium, I’m absolutely forcing my way in-between the retailer and the customer.
That’s not a service.
Now, nobody needs to buy a PS5, but the fact that a PS5 isn’t a required to sustain life doesn’t magically transmute scalping into a service.
> their existence doesn't change anything other than giving you the option to pay $200 and skip the bullshit
They are responsible for the bullshit. Of course it changes things.
How is it so hard to understand that someone creating an additional, artificial market barrier to extract rent is also making it harder for anyone else to buy the product in the first place?
I signed up with Sony to sit in the queue to buy one PS5. My signup is attached to my PSN account to help prevent scalping.
It cost Sony money to implement that queueing system and to fight scalpers.
Sony is losing licensing revenue on consoles because scalpers are eating into what would normally be spent purchasing games.
Sony is losing customer goodwill because scalpers are forcing themselves in-between Sony and their customers.
More of Sony’s customer base is frustrated and more likely to abandon purchasing the product altogether —- even when supply issues are resolved — because they have to compete with scalpers.
It’s not a fucking service, and we’d all be better off by extending existing ticket scalping laws and the CFAA to vigorously prosecute these absolute useless low-lifes that should be unceremoniously kicked back into whatever minimum wage gutter they crawled out of.
>these absolute useless low-lifes that should be unceremoniously kicked back into whatever minimum wage gutter they crawled out of.
If your perception of this situation is that minimum wage "useless low-lifes" should kicked back into the gutter because you have this logically unsound idea that it would be easier to buy a PS5 if scalpers didn't exist, you've lost the plot. Your understanding of the demographic that is doing this is wrong, and even if it wasn't, you have completely uncalled for contempt for a class of people who are trying to do better for themselves (or maybe even just trying to make rent and groceries).
If you're going to leave another comment hollering about rent seeking or how scalpers singlehandedly create this problem, but refuse to even acknowledge that you've already been told:
>The scalpers are selling them to somebody -- that somebody would have just bought at MSRP and you would still have to do what I mentioned above.
>because the scalpers definitionally need somebody to buy everything that they do. The demand isn't erased just because they don't exist.
>The fact that scalpers are still buying consoles means they're still selling them. That means if the scalpers didn't exist consoles would still be sold out, it would just be individuals following twitter accounts to spam refresh for a single console instead of 10.
I'm just going to ignore it, so you can save yourself the typing. I'm trying to give you the benefit of the doubt but it looks a hell of a lot like you don't have interest in a good faith discussion.
You’re purposefully ignoring that they actively create and exacerbate market inefficiencies by making it difficult for manufacturers and retailers to manage demand effectively, and by inserting themselves as a middleman to extract their rent.
> … completely uncalled for contempt for a class of people who are trying to do better for themselves (or maybe even just trying to make rent and groceries).
How is it uncalled for? They’re useless trash making money by virtue of being willing to take advantage of others, not because they’re contributing anything of any value in any form.
They produce nothing and provide nothing of value. The only skill required is a lack of moral scruples.
So yes, kick the useless trash — and their enablers — back to the gutter they crawled out of.
And for good measure, prosecute them under the CFAA once they’re there.
This doesn't add up.
Every person who buys a PS5 from a scalper for $700-$800 would also buy it for MSRP at $500, unless they are insane. Demand would outstrip supply even in the absence of scalpers, because one PS5 would be bought at MSRP from a retailer for every one that would have otherwise been bought and then sold by a scalper.
The only kink is that because PS5s immediately sell out at a price of $500, people who don't have the time to camp checkouts and/or want the item immediately are shit out of luck. However, they could pay a scalper an extra $200 to do that for them, because that's the value of the time they would lose acquiring the PS5, or the value they would miss out not having the PS5 immediately. In economics parlance, this is a service. You can call it something else if it makes your feel better. Either way, scalper activity cannot oversell the demand for a PS5 beyond not accurately modelling the sales you would lose from customers not wanting to deal with the effects of illiquidity on the market. The only thing scalper activity misrepresents if your MSRP is below what they're charging is the customers who won't buy your product at all if you're constantly sold out. Scalpers do not change forecasts.