There is a national ammunition shortage. It is not getting better. Gun store owners say it will last for years.
There is a simple solution: raise the price.
When you hear the word “shortage,” always think: “at some price.”
Manufacturers ought to raise prices dramatically. But they don’t. Why not? The only reason I can come up with is public relations. If so, it’s a mistake. There is nothing like higher prices to relieve the problem of rising demand.
Stores are rationing ammunition. Why? Why not raise the price?
Public relations. The store owners are afraid of being seen as price gougers. But higher prices would send a message to suppliers: increase output.
If the world wants more of what you are selling than you can deliver, raise your price. That’s the free market’s way of clearing markets.
When you ration what you are selling, you are not maximizing your income. You could use this income to add manufacturing capacity, which would enable you to meet rising demand. What good does rationing do in terms of increased production? None.
Rationing is the state’s way to solve the problem of rising demand. The state says: “Line up.” The free market says: “Pony up.”
To cut the long lines, raise the price.
At an auction, the auctioneer does not ration the item. He can’t. He has only one to sell. So, he says: “Do I hear. . . .?” The free market is a gigantic auction. When supplies get tight, prices rise. That is the effect of bidding. Rising prices are the auctioneers’ way of matching supply with demand.
The ammunition manufacturers are unwilling to raise prices. Why? I think it’s public relations. They don’t intend to increase capacity. They will not use the money they could be making to increase capacity. They prefer to ration supplies. All the way down the supply chain, sellers are rationing.
They should be raising prices.