I'll try to get at my point in a different way. I would like to observe that Typhoon Hayain leveled the infrastructure necessary to conduct a free market. Because of this, using free market analysis to find a way to alleviate the needs of those on the ground during the disaster makes little sense.
"even at the pre-disaster price, you're correct that there will be "some increased market demand." But it would never be the same response. It would be a weaker response."
"Less incentive = less response and greater delay."
"the adjustment would happen VERY quickly"
"bottled water would immediately flood to the area if there is a profit signal."
All of these quotes chopped up from a couple of your posts say to me that there is some inherent communication across the market and I believe you're over estimating the effectiveness of this communication.
Anytime we want to robustly analyze communication we are compelled to consult shannon's model of communication.
It's pretty straight forward, a source encodes a signal, transmits through a channel, a receiver decodes it and the communication is a success. It's the channel that I want to focus on.
The channel that would transmit this economic information is murkey to me. Is it that you'll see competitors revenue streams increase at price points, or hear on the radio what things are selling for, or consult some central hub of information, or have salesman throughout the area phoning each other, or that people will go two miles down the road for water priced more reasonably? How would the price signal leak out of an area where power is down and roads are swept into the sea? If the possible channels for communication are all significantly compromised, I don't see how the free market can effectively price anything. Without this price information flowing through the region to allow for every demand to be matched with a resource at the theoretically rational price level, you do not effectively have a free market.
This is why I find my method for allocating resources to needs entirely more effective. Everyone can enact it locally; it'll get the best result given the dire state of affairs; it has its own moral rational; and it doesn't require some magical level of information flow across a region in relative chaos.
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