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Old January 28, 2013, 06:44 PM   #1
ScottRiqui
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Is it "unethical" for a gun shop to raise prices during a shortage?

A comment in another thread got me thinking - is it unethical for a gun shop to raise their prices during an actual shortage?

I don't like seeing prices go up any more than the next guy, but on the other hand, store owners earn their living by moving a certain amount of stock each month, at a particular profit margin. If they're legitimately concerned that they might not get any new stock once they've sold what they have on-hand, I can understand wanting to maximize profit in preparation for leaner times ahead.

I'd feel different if it were something like gasoline, heating oil or water and we were in the middle of a natural disaster. Likewise, I think it matters how much of the store's total sales depends on the items that are in short supply. Wal-Mart isn't going to go under in six months if they have to rely on non-ammo/non-firearm sales for a while, for example, so I'd probably be less sympathetic if they started raising prices wildly.

Any thoughts?
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Old January 28, 2013, 06:47 PM   #2
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It isn't only whether new stock will be available, it is the wholesale price they expect to have to pay in order to restock. If prices are going up at the distributor, then it should be no surprise when they go up at the retailer.
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Old January 28, 2013, 07:05 PM   #3
Glenn E. Meyer
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We have a few price gouging threads before. One is about Cabela's, the other was closed. Please check those out before we go over the same ground.

Thanks.
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Old January 28, 2013, 07:11 PM   #4
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Quote:
It isn't only whether new stock will be available, it is the wholesale price they expect to have to pay in order to restock.
Beyond that, there's the question of when and how much restock they get.

Say a retailer has a given item, say a $1000 rifle, that they usually move ten of in a week. Now they're getting five a week. It wreaks havoc with cash flow, and the dealer has to make more off what inventory he can get.

If demand has spiked and supply has diminished, that's going to cause a rise in prices. It's Econ 101, not Introductory Ethics.

There's a line, of course, but defining it is difficult. Joe Bob selling something at a 300% markup to make a quick buck might be infuriating, and he may be a jerk, but is it really outside the bounds of what we expect in a free market?
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Old January 28, 2013, 07:23 PM   #5
Glenn E. Meyer
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Interestingly some of the local big box stores are getting in ammo and selling it at their regular price. However, you have to buy only one box at a time. That is to avoid, folks stocking up at opening time and then selling for high prices at the gun show.

Reasonable amounts of 45 ACP are coming in. I've kept up my supply.
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Old January 28, 2013, 07:27 PM   #6
hardworker
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Ethical shop owners soon become former shop owners. Ammo isn't a life saving necessity like food and water, so I don't look at it like price gouging.
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Old January 28, 2013, 07:28 PM   #7
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I don't think that it is unethical. I don't participate when prices are inflated, but that is my decision. I actually think that some smaller dealers may have to close up shop after this unprecedented run on firearms and ammunition. The amount of time they will have to wait to restock may be more than some of them can take.
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Old January 28, 2013, 07:42 PM   #8
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Maybe you should rephrase your question to:

"Is it unethical to follow the principles of basic economics and instead ignore the supply and demand curve?"
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Old January 28, 2013, 07:51 PM   #9
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Short answer, nope.
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Old January 28, 2013, 08:29 PM   #10
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Some gun shops make a lot on ammo and reloading supply's, if they don't have any ammo on the shelves to sell, they must make money on the few guns they have in stock.
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Old January 28, 2013, 08:32 PM   #11
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Old January 28, 2013, 08:51 PM   #12
StukaJU87
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I can understand it if manufactures have stopped production because they're waiting to see what will happen with ban regulations. Since there's no point making a product you can't sell. This will cause prices to rise, since there is no supply. However, someone pointed out in another thread that manufactures have announced that they intend to raise their prices because they've seen how much some stores have raised their prices.

This is not a result of supply and demand, it is a result of greed. Some stores gouged so much that the manufacturer thinks they can get more, which means the distributors will charge more, which means every LGS will have to charge more to cover their costs.

Now I know, with time, the market will correct itself, provided people wise up and stop paying inflated prices. Until then, your choices are simple: pay more or try to wait it out and hope prices return to normal.
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Old January 28, 2013, 08:57 PM   #13
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It's a tough call, the huge corporations will get a government bailout if they screw up too bad. But, where is the bail out for the little guy. Who's to say the little guy doesn't deserve assistance more than the large corporation? In a market such as ours I feel it is totally ethical to sell ammo and such at the inflated prices. If the little guy overprices himself too much he will drive himself out of business. Damned if he does damned if he doesn't.
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Old January 28, 2013, 09:00 PM   #14
cwhit23
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Is this the same concept of price gouging gas when the government creates a panic that there is going to be a gas shortage? Same difference in my opinion. It's wrong and I don't agree with it.
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Old January 28, 2013, 09:11 PM   #15
Dr Big Bird PhD
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Quote:
This is not a result of supply and demand, it is a result of greed. Some stores gouged so much that the manufacturer thinks they can get more, which means the distributors will charge more, which means every LGS will have to charge more to cover their costs.
Oh stop it. This argument entirely ignores the reasonable logic one would present in such a situation. You sound like someone who advocates socialism and ignores basic intuitive rationalization.

1) The panic has established that people are willing to purchase mass quantities of ammunition and rifles at a higher premium.
2) The panic has created a new and wider market of potential buyers for these platforms
3) If the panic subsides and no new bans are in place, then prices
3a) Will stabilize at a slightly lower level but overall higher level because of the increase of consumers and the difficulty for new competitors to enter the market because of government interference and extreme overhead
3b) Will stabilize at pre-panic prices because the influx of market consumption was purely emotional fear-mongering and not representative of a wider market consumer base.

Please illustrate how this is "Greed". Greed is how our society, and in fact all societies are based. To embrace this concept instead of treating it as the pink elephant in the room, we can move forward in social markets generate more capital to satisfy the consumer base.

YOU are the evil that is swallowing the world. Not because you like guns, but because you have drank even the smallest sip of the "Greed/Altruistic" kool-aid that makes our society and economy thrive.
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Old January 28, 2013, 09:24 PM   #16
Vanya
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Goods (and services, for that matter) are worth what people are willing to pay for them.

Quote:
Originally Posted by cwhit23
Is this the same concept of price gouging gas when the government creates a panic that there is going to be a gas shortage? Same difference in my opinion. It's wrong and I don't agree with it.
Not the same. We live in a society where gas is a necessity, pretty much. Most people depend on their cars to get to their jobs, so they have no choice about paying inflated prices for gas. (In theory, there are other things they can do, such as buying more economical vehicles, or carpooling, or finding jobs that are closer to home -- but in practice, especially in the short run, they're stuck paying higher prices.)

But even in that case, the source of the inflated price is an increase in the cost of the raw material, driven by speculation at the level of commodities markets, not "price-gouging" by Joe who owns the gas station on the corner.

If people are willing to pay inflated prices for things that aren't necessities, like yet another gun, or even a first gun (strange as it may seem to us, many people don't regard guns as necessities, and manage their lives just fine without them), there's nothing unethical about charging them what they're willing to pay; they're making a choice to buy something that's not a necessity in the same way that gas, food or medicine are necessities.

And lots of people like expensive stuff better. It doesn't have to be better quality, just more expensive -- then they think it's better.

So why not make them happy?

Last edited by Vanya; January 28, 2013 at 09:29 PM.
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Old January 28, 2013, 09:25 PM   #17
colbad
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If you don't like it, don't buy it. Its not like an essential to life like food.

I was talking to one shop owner who said he has no problem "sticking it to" those on the internet who he will most likely never hear from again. However, he knows that taking care of local good customers and not gouging them, will keep his doors open in the long run.
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Old January 28, 2013, 09:29 PM   #18
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There could be several reasons why prices go up. Supply and demand is obviously number 1, but there is also his replacement costs for new inventory, a situation similar to the price of gas. If his next price has jumped up by a large margin, he needs to raise his price now in order to be able to pay current bills and still have enough to restock at the newer higher prices
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Old January 28, 2013, 11:13 PM   #19
shootniron
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Demand dictates price in ammo as with other things. I do not look at it as gouging if they are charging the going rate...and I do not have to buy it.
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Old January 28, 2013, 11:36 PM   #20
StukaJU87
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Quote:
Oh stop it. This argument entirely ignores the reasonable logic one would present in such a situation. You sound like someone who advocates socialism and ignores basic intuitive rationalization.
Had you bothered to read my whole post before you set up your soap box and megaphone, you would have noticed that I said it came from someone else's post and said the the price increase WAS due to a lack of product. The greed portion was directed at unscrupulous LSG raising prices on items that were not in short supply and causing the manufacturers to possibly raise their prices on those certain items. I also said the market would correct itself.
I guess it's only right when you say it.

I love how defensive people get whenever the issue comes up about over paying. If you feel you need to justify the price you paid, then you probably paid too much.

Quote:
YOU are the evil that is swallowing the world. Not because you like guns, but because you have drank even the smallest sip of the "Greed/Altruistic" kool-aid that makes our society and economy thrive.
Because price gouging benefits everyone, but hey, whatever helps you sleep at night.

Next time you see something with a ridiculous price tag, don't shake your head, remeber, it's essential for our thriving economy.

Last time I checked, it was still a free country and we are all entitled to our own opinions, however different they may be. Let us agree to disagree.

Last edited by StukaJU87; January 28, 2013 at 11:43 PM.
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Old January 28, 2013, 11:43 PM   #21
cwhit23
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Vanya-

You create a good point about it being a necessity and I agree. I think I'm just looking at it from a different perspective and you even said it.

gas prices rise over speculation.

gun and ammo prices rise over speculation..

There is a direct correlation. However you are correct about people having to have gas to get to work etc. where a gun is not needed to get to work etc. I still don't feel it's right for gun shops to "stick it to" new gun buyers or internet customers because they can make an extra 25% or whatever right now. Those could become life long customers that would come back after this paranoia dissipates. When this does end and a first time buyer realizes he got hosed for $100-$200 more than they should've they probably will find another shop to go to and never say a good word about the previous shop. Just my point of view.
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Old January 29, 2013, 12:10 AM   #22
dstryr
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Ask yourself this about owning guns and buying ammo: If it wasn't important to you 3 months ago, why is it important now? The shops raising prices are in it so they can retire, not so you can retire and again, it is a free market decision on the buyer's part to part with his/her $$$, or not.
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Old January 29, 2013, 12:11 AM   #23
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This is a free market society, that means we are free to buy or not buy from whomever we choose. If the price is too high, you don't buy it. Guns and ammo are not necessities and are subject to the laws of supply and demand. How much you charge someone for your product is directly related to what someone will pay for your product. If people are willing to pay $1600 for an $800 gun, you sell it for $1600. When people stop paying, the prices will go back down.
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Old January 29, 2013, 12:12 AM   #24
Vanya
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Quote:
Originally Posted by cwhit23
When this does end and a first time buyer realizes he got hosed for $100-$200 more than they should've they probably will find another shop to go to and never say a good word about the previous shop. Just my point of view.
You're right that this is a possible consequence of a seller's raising prices in response to increased demand, but the fact that it may not be in the best long-term interest of the merchant doesn't make it "wrong." It may be foolish or short-sighted, but there's no ethical requirement for people to act in their own best interest.

As to "speculation," let's not confuse two different usages of the word. In the example of gas prices, I was using its more restricted meaning of "financial speculation" -- buying up a commodity (or a stock, for that matter) in the belief that prices will rise. This is why gas prices go up whenever there's a good economic forecast; speculators in oil futures are betting that an increase in economic activity will lead to a rising demand for oil, and thus to a rise in the price per barrel.

There may be people who are buying guns at inflated prices, thinking that they'll make money selling them in the event of a ban, but I don't think that applies to most of those who are rushing to buy guns.

I think the "speculation" you're referring to in the case of guns is simply the fear that there will be a ban... the rush to buy guns is driven by that fear, not by the desire to make money.
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Old January 29, 2013, 12:20 AM   #25
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I have long ago come to a realization. It is no longer a local market, State market or even a National market. It has become an international market for all of our commodities and goods. Services might follow, but it could be ruled as slavery.

I can shop from home with certain considerations such as cost of shipping offset by local taxes, hazmat fees, FFL fees and etc. Then not to mention my cost of gas for the hot rod lincoln to pull out of the driveway.

It does not take much intelligence to satisfy your wants or needs as long as you have the money.

I can then use my fuel money on one of my three boats since I live on a 44,000 acre lake.

Life is good. Carry a double barrel coach gun for personal protection. It is endorsed by the White House.
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