Greetings INGO community:
I am a gun collector, shooting enthusiast and doctoral student currently working on a paper on the price elasticity of small arms ammunition. Yes, I know…strange combination!
I’m not writing this trying to “school” anyone, I am genuinely interested in your feedback to a theory. Moreover I am likely to post this same thing on several discussion boards, and apologize in advance if you end up seeing this in different places.
My question is this: did the ammo manufactures (and to a lesser degree retailers) that did NOT substantially raise prices during the 2012-2014 (or current for .22) ammo shortage potentially do the shooting community a disservice?
Here is what I mean: free markets work (when left alone) by prices being effectively negotiated between buyers and sellers. The stable price is the equilibrium point which maximizes profit. When ammo prices stayed artificially low to demand a home-grown secondary market was created where enterprising people figured out product delivery schedules and cruised every Wal-Mart in town buying every box of ammo they could despite the store’s attempts at purchase limits (or ammo never made it to the shelves because the employees grabbed it). All of this ammo subsequently showed up at gun shows, GunBroker, Craig’s list and local bulletin boards, etc. at dramatically higher prices. Had the manufacturers raised prices I am speculating that the hoarders / scalpers would not have been able to do this and there would be supply at your local sporting goods store (albeit at a much higher price) saving shooters the trouble of having to hunt for inventory. Moreover, in theory the extra profits generated would have gone to the manufactures that could have increased production capacity reducing the length of the shortage versus lining the pockets of the scalpers and extending it.
My hypothesis is that most manufactures didn’t raise their prices substantially because (a) they underestimated the huge demand and the length of time it would take for the ammo market to equalize, and (b) they didn’t want to damage their company and brand perception similar to the ire directed at retailers like Cheaper Than Dirt.
Thanks in advance for your thoughtfulness, I look forward to reading your responses!
I am a gun collector, shooting enthusiast and doctoral student currently working on a paper on the price elasticity of small arms ammunition. Yes, I know…strange combination!
I’m not writing this trying to “school” anyone, I am genuinely interested in your feedback to a theory. Moreover I am likely to post this same thing on several discussion boards, and apologize in advance if you end up seeing this in different places.
My question is this: did the ammo manufactures (and to a lesser degree retailers) that did NOT substantially raise prices during the 2012-2014 (or current for .22) ammo shortage potentially do the shooting community a disservice?
Here is what I mean: free markets work (when left alone) by prices being effectively negotiated between buyers and sellers. The stable price is the equilibrium point which maximizes profit. When ammo prices stayed artificially low to demand a home-grown secondary market was created where enterprising people figured out product delivery schedules and cruised every Wal-Mart in town buying every box of ammo they could despite the store’s attempts at purchase limits (or ammo never made it to the shelves because the employees grabbed it). All of this ammo subsequently showed up at gun shows, GunBroker, Craig’s list and local bulletin boards, etc. at dramatically higher prices. Had the manufacturers raised prices I am speculating that the hoarders / scalpers would not have been able to do this and there would be supply at your local sporting goods store (albeit at a much higher price) saving shooters the trouble of having to hunt for inventory. Moreover, in theory the extra profits generated would have gone to the manufactures that could have increased production capacity reducing the length of the shortage versus lining the pockets of the scalpers and extending it.
My hypothesis is that most manufactures didn’t raise their prices substantially because (a) they underestimated the huge demand and the length of time it would take for the ammo market to equalize, and (b) they didn’t want to damage their company and brand perception similar to the ire directed at retailers like Cheaper Than Dirt.
Thanks in advance for your thoughtfulness, I look forward to reading your responses!
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