|
|
 Originally Posted by pantherhound
I remember ITT there was a video about the merits of price gouging.
I would be interested to hear views on the recent news about the pharmaceutical CEO who raised the price of a drug used to protect AIDs and cancer patients by 5,000%. Each pill costs about a dollar to produce. The guy claims he needs to make a profit, but it seems there is a lot of scope to reduce the price for moral reasons given the large margin he seems to be making and the barriers to entry for competitors?
Seems in this instance price gouging is a bad thing since the product is not scarce and therefore the argument about allocation according to greatest need does not apply.
The behavior is temporary in markets. The higher the price, the higher the pressure to increase quantities sold, even when the resource isn't truly scarce. What keeps the behavior from being temporary is, you guessed it, bad laws. There are millions of examples of things being horribly overpriced purely because of bad laws.
If this situation perpetuates, it's not the fault of economics and capitalism. Economics explains why the situation doesn't perpetuate without government intrusion.
|
Reply With Quote