Highway robbery?

[Vikas]

Suppose there was a limited access highway with no other gas station for 50 miles in each direction. How many of you would call it highway robbery if that gas station decided to charge 50% higher than the going rate? For example, regular $5.49 cash/gallon.

Will you call it price gouging or not?

I will make it even better. The same gas station has a credit card operated rest room. $9.99 to take a leak.

Are you going to call it price gouging or let it slide under the guise of free enterprise?

- Vikas

 

[Tempest]

Originally Posted By: uc50ic4more

I am simply trying to get a working definition of "highway robbery" and "price gouging".


Ask 100 different people for these definitions, Tempest, and you'll have upwards of 100 definitions of these terms to play with!

Exactly my point.

 

[Tempest]

Originally Posted By: Vikas
Suppose there was a limited access highway with no other gas station for 50 miles in each direction. How many of you would call it highway robbery if that gas station decided to charge 50% higher than the going rate? For example, regular $5.49 cash/gallon.

Will you call it price gouging or not?

I will make it even better. The same gas station has a credit card operated rest room. $9.99 to take a leak.

Are you going to call it price gouging or let it slide under the guise of free enterprise?

- Vikas

Is it worse to have a gas station with higher rates, or no gas station at all due to regulated prices? Putting yourself into a position that limits your choice is who's fault?

It's entirely possible that the original station really...REALLY doesn't want to deal with credit cards but may be forced to accept them due to other contractual obligations. They are simply pricing the transactions to a point that they push their customers to use cash. Shouldn't that be their option?
They are not obligated to sell you anything, and you are not obligated to buy from them, so there can be no price gouging.

 

[bigmike]

If you want highway robbery and price gouging examples, come down here after a hurricane and see what a generator cost. Or, before a hurricane, price a piece of plywood.

 

[Tdbo]

Originally Posted By: Tempest
Originally Posted By: Vikas
Suppose there was a limited access highway with no other gas station for 50 miles in each direction. How many of you would call it highway robbery if that gas station decided to charge 50% higher than the going rate? For example, regular $5.49 cash/gallon.

Will you call it price gouging or not?

I will make it even better. The same gas station has a credit card operated rest room. $9.99 to take a leak.

Are you going to call it price gouging or let it slide under the guise of free enterprise?

- Vikas

Is it worse to have a gas station with higher rates, or no gas station at all due to regulated prices? Putting yourself into a position that limits your choice is who's fault?

It's entirely possible that the original station really...REALLY doesn't want to deal with credit cards but may be forced to accept them due to other contractual obligations. They are simply pricing the transactions to a point that they push their customers to use cash. Shouldn't that be their option?
They are not obligated to sell you anything, and you are not obligated to buy from them, so there can be no price gouging.


This. They have made their pricing structure very clear and it is obviously posted prominently. It's their right to do so. However, after viewing that, I know that I would not be frequenting that station because their structure is out of line with the norm,and thus, does not put the business in a favorable light with the average consumer like myself that uses the pay at the pump option.

 

[Tempest]

Originally Posted By: bigmike
If you want highway robbery and price gouging examples, come down here after a hurricane and see what a generator cost. Or, before a hurricane, price a piece of plywood.

This is supply and demand. If the prices for plywood are kept low (normal), then people will buy more than they need, which will cause a shortage, and people with need will go without. Higher prices help to distribute goods to those with the most need.

Artificially low prices at the store will also lead to a black market in plywood where higher prices will prevail anyway.

The higher prices also ensure that more plywood is shipped to the area helping more people to get the plywood they need.

 

[PandaBear]

Originally Posted By: Tempest
Originally Posted By: bigmike
If you want highway robbery and price gouging examples, come down here after a hurricane and see what a generator cost. Or, before a hurricane, price a piece of plywood.

This is supply and demand. If the prices for plywood are kept low (normal), then people will buy more than they need, which will cause a shortage, and people with need will go without. Higher prices help to distribute goods to those with the most need.

Artificially low prices at the store will also lead to a black market in plywood where higher prices will prevail anyway.

The higher prices also ensure that more plywood is shipped to the area helping more people to get the plywood they need.


What you said is only theoretical, reality is very different:

In a monopoly situation (short term, due to disaster) and fear, people may pay more and buy more just in case they run out.

The delay between consumption and supply can cause price shock that doesn't bring in any more supply. I highly doubt a freight train full of plywood can come as soon as plywood sold out.

Limited time and communication makes consumers unable to acquire knowledge about pricing and gouging, encourage suppliers to cheat by price that the market do not support.

If you are low on gas and have traveled for miles without gas station, and see one gas station but not sure how many more will be along the way or how far away they are, you will find that this first gas station will be a lot more expensive than the others, even if they may be just around the corner.

Monopoly is never a positive aspect of market economy at least for the consumer.

 

[SwampSurvivor]

I used to pay cash for gas until they started making me go in twice. Once to prepay to fill the tank and once to get the change.

 

[Tempest]

Originally Posted By: PandaBear

What you said is only theoretical, reality is very different:

In a monopoly situation (short term, due to disaster) and fear, people may pay more and buy more just in case they run out.

The delay between consumption and supply can cause price shock that doesn't bring in any more supply. I highly doubt a freight train full of plywood can come as soon as plywood sold out.

Limited time and communication makes consumers unable to acquire knowledge about pricing and gouging, encourage suppliers to cheat by price that the market do not support.

If you are low on gas and have traveled for miles without gas station, and see one gas station but not sure how many more will be along the way or how far away they are, you will find that this first gas station will be a lot more expensive than the others, even if they may be just around the corner.

Monopoly is never a positive aspect of market economy at least for the consumer.

You leave out some important information. The largest is that the price is going up because the suppliers KNOW that a hurricane is coming. This is also PUBLIC KNOWLEDGE. There will also be the typical places to buy from so there is NO monopoly on supply or information. And a smart person in hurricane territory would have prepared long before a hurricane hit the news and demand spiked.

The suppliers will have as much advance warning as anyone else so they have every incentive to procure plywood as soon as they can and get it into the area to supply the greater demand. This is the suppliers speculating on sales and having the freight cars showing up BEFORE the storm hits and increasing stock above normal levels. Again, no monopoly exists, but the profit motive incentivizes suppliers to take a risk (speculate) and provide increased levels of demanded items.

If the price is the typical $40 per sheet, then people will have great incentive to buy more "just in case" as you say. If the price is $150 a sheet then people will have incentive to very carefully measure and buy only what they need. This reduces waste and increase availability to those in need.