Quote Originally Posted by a500lbgorilla View Post
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.
Well you have direct communication which your contention is that typhoons would interrupt or severely damage. But even still, there would be stores nearby or adjacent to one another competing at price gouging. Two gas stations on the same corner competing to sell gas at a gouged price, for example. Competition like this requires very little actual communication. And in a disaster like a tornado or earthquake which affects isolated parts of a city, there'd still be intact communication for a majority of sellers.

But more importantly, suppliers can reasonably assume that prices will rise during a disaster. They don't need an actual price signal, they can just expect that prices will increase in accordance with the expected increase in demand. And in a gouging-prohibited state, they can safely assume that the goods will sell at the same price as ever. Either way they'll probably increase the supply to try to maximize profits, but in the former case they will have a much greater incentive to do so with great haste than in the latter.