Saturday, June 1, 2013

The fear of bullet gouging

As part of a project at work I've been speaking with a lot of gun owners and I talked to a few of them about the ongoing ammunition shortage.

The basic idea is that across the board ammunition is hard to find right now. It flies off the shelves as soon as it comes in. Shooters openly declare that they are hording ammo because they are concerned about potential increases in gun control legislation.

Some manufacturers are making capital investments so they can produce more but parts like the primer for each round need precise equipment that take a long time to create so markets have been unable to respond to the demand quickly.

What I asked the shooters is why sellers don't charge more for ammo. It would discourage hording and divert the ammo to the people who want it the most. The answer I received was frustrating:

The shooters call that "bullet gouging" and would boycott sellers who "take advantage" of them by letting the price rise wit the demand. This resentment would continue after the ammo shortage ends.

Apparently there has been a limited price increase, but clearly it wasn't enough. It's obvious that the same irrational resentment of "price gouging" that holds back post-emergency recoveries is making this ammo shortage worse.

1 comment:

  1. You should have asked me. Pfft.

    My take on the issue is that it is well known that this is a short term shortage, and while we would expect market forces to equalize supply and demand in the long run, it's just not going to happen overnight with something like ammo.

    Still, why aren't retailers raising prices in the short term anyway?

    Small sellers are, big retailers aren't. They don't derive much revenue from ammo sales, and they have other things to sell. I think they are pretty much using ammo as a "loss leader". You come in to check if they have ammo because they haven't increased prices, and whether they have it or not, many people end up getting a gallon of milk, or grabbing other things they may not have otherwise bought.

    The big retailers can get away with that, little guys, gun shops mostly, who make a substantial portion of their profit on ammo, have to increase prices to try and make up for the lack of supply, but the amount they can increase prices is hampered by competition, keeping prices lower than we would expect.

    (if you follow me, you should have realized that my point is big retailers have essentially increased prices but are talking that increase as a loss rather than passing it on in the hopes of making it up on other sales.)

    I might be wrong, but I don't think I'm far off the mark. I stop at Wal-Mart twice as often as I ever have before, and seem to leave either with no ammo and a bunch of stuff I didn't need, or a few boxes of ammo... and a bunch of stuff I didn't need.