HN user

prentis

7 karma
Posts0
Comments5
View on HN
No posts found.

Disasters are not a corner condition. Limited resources and unlimited wants is a permanent condition. Disasters just tweak the relative values of these parameters, which are reflected in prices. As always, the system adapts and re-routes the resources to where they're needed most.

"jacking up prices has no benefit"

Jacking up prices gives distant suppliers an incentive to divert resources towards the disaster-struck area, reducing shortages.

Jacking up prices discourages people from buying goods that they don't really need, making them available to people who really do need them.

On the other hand, if prices are not allowed to increase, people have an incentive to hoard the scarce goods that they anticipate will become scarce. This of course creates those very shortages. And the hoarded goods go unused while the people who really need them are unable to buy anything.