Foundation for Economic Education
Published 22 Dec 2020Support Out of Frame on Patreon: https://www.patreon.com/OutofFrameShow
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As we enter peak holiday season, most people have their shopping done by now, but as always, many are scrambling last-minute for their purchases. And if you aren’t one of those early-birds fortunate enough to procure a PS5 or Xbox Series X, you can guarantee that you won’t be able to find one unless you’re willing to pay $1,200 to a scalper.
Many are understandably frustrated. How is it fair for people to buy up the consoles at $500 and sell for nearly double or triple the cost? “There ought to be a law” against that kind of thing — right?
Well, in short, there’s nothing wrong with scalping — and a few economic lessons will help explain why.
Scarcity is real and so is time-preference. Scalpers (and even bots) show that demand for some goods is so high that people are willing to pay several times the list price — which could provide a lot of information to Sony and Microsoft on how many consoles to produce and in what parts of the world. They could factor that information into the future, so there would be less problems with availability, but most retailers make this information exchange impossible.
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CREDITS:Produced by Sean W. Malone
Written by Jen Maffessanti & Sean W. Malone
Edited by Paul Nelson
Asst. Edited by Jason Reinhardt
