Knowledge Problem

Mother Jones on Guns and Ammo Price Gouging

Michael Giberson

A post at Mother Jones‘s Political Mojo blog sees a silver lining in current price gouging on guns (see “Gun Lovers Freaking Out Over Price Gouging“): “It might help keep sales in check—at least temporarily—while Congress gets around to thinking about thinking about considering an assault-weapon ban.”

Well, technically speaking, current prices and current sales reflect efforts to coordinate supplies during the current short term spike in demand. If someone wanted to actually limit the number of legal sales they should favor a capped low price rather than a market-driven high price.* Currently the high price is motivating a lot of effort to bring more guns to market; a capped low price would do much more to keep sales in check.

*Gun control advocates should note that the effect of a binding price cap would be to promote legal work-arounds (i.e. “we only sell that model with this handy $150 instruction guide”) or simply motivate more dealers to sell on the black market. In the very short run a price cap would lead to shortages, but over time smart people find ways to overcome barriers.