- Sep 6, 2000
OK let's try this from the POV of a producer. There's a shortage of hand sanitizer in <insert city here>. You're already producing at capacity and need to decide whether to incur the costs to create a new production line which may be quite substantial and time consuming. Indeed you're unsure if you start the line, it will even begin producing before the crisis is over because you still need to build/staff/supply it which takes time. If you succeed then you can move an additional X units at the same price as now until the situation resolves, at which point you'll need to decommission the line to avoid oversupply and future negative price shocks. Do you as a capitalist make that investment?You think the fact that it's selling out literally everywhere isn't a signal to potential market participants? It's literally selling as fast as they can make it, what would increasing price do other than screw people over?
Now change the scenario where you're the distributor. Do you hire a new driver (who will presumably want higher pay to drive directly into coronavirus territory) knowing you won't make any additional revenue to cover the additional risks you're assuming much less make any new profit on the route?