Good scholarship makes you change your mind, but great scholarship
makes you think differently. As usual, Ramsi Woodcock's article "The Efficient
Queue and the Case Against Dynamic Pricing", is great, because it made me
think differently about price regulation. Woodcock observes that prices not
only communicate information, but also redistribute resources. Sometimes,
producers change prices in response to competition or changes in the cost of
production. But other times, they change prices just because they can.
When prices reflect the marginal cost of production, consumers benefit
from market efficiencies. But when prices reflect a surge in demand, they
simply transfer resources from consumers to producers. Of course, when
prices increase dramatically in response to a sudden surge in demand,
consumers object and the government steps in to prevent price gouging.
Obvious price gouging is now the exception that proves the rule of
ecommerce. Suddenly, producers can change prices instantaneously in
response to tiny changes in demand, extracting the largest possible surplus
from consumers, without them even realizing it. Business has always been the
art of screwing your customers without them realizing it. Ecommerce just
made it a science.
|Journal||Law Faculty Scholarly Articles|
|State||Published - Jan 1 2021|