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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: SilentZ who wrote (228387)	4/9/2005 3:20:06 PM
From: tejek	Respond to of 1578699

If prices are artificially limited, even by a false sense of generosity by the sellers, than you will have shortages. Remember the gasoline lines? Is there any indication that there's any less gas available now than there was two years ago? No. Are people buying less gas than before? Not yet... they might... gas demand is elastic in the short term, a lot more inelastic in the long term. And its mostly inelastic in the long term because we have not developed reasonable alternatives to the car nor strongly encouraged the development of alternative fuels for cars. ted

To: SilentZ who wrote (228387)	4/10/2005 4:01:50 PM
From: TimF	Respond to of 1578699

Is there any indication that there's any less gas available now than there was two years ago? No. Are people buying less gas than before? Not yet... they might... If a gasoline supply goes to to a great extent, than demand will go down as the prices go up. It might take a doubling of prices from here but at some point demand will go down. Even in the short run there are ways to use less gas. You can cut out all unnecessary trips, drive slower, coast to a stop or at least to a slower speed before stopping when you see you will need to stop ahead, ect. If however you decide that you won't let prices get any higher you will have multiple factors pushing you towards a shortage. People will have less incentive to use less (until actual shortage start to become apparent), people will have an incentive to try to buy and store gasoline if they think that there will not be enough available, and producers of gasoline have an incentive to look for other markets to sell gas to that don't have the same price limits. And those are just the short run effects, there are other effects that take place in the medium or long term. Price controls almost never work out well. If the price restriction is close enough to, at, or above the market rate they have little impact (and thus little benefit), but even in this situation they can discourage investment. If the price restriction is well below the market clearing rate you get shortages. You ration by queue, or by connections, or by explicit rationing (ration cards ect.) instead of by price. Tim