Monday, November 13, 2006

Playstations, price gouging, and anticompetitiveness

So, Sony, manufacturer of the PlayStation 3, which is being released in time for Christmas, is apparently offering a special deal: pay extra for the box plus a bundle of games of and we'll guarantee delivery by Christmas. This sounds like a neat deal to me, and perfectly reasonable: consumer pays a premium for guaranteed delivery of a desired good. Consumers who don't want to pay the premium can compete with everyone else on the open market for the residual inventory. Because of market competition, of course, they might end up paying more than they would have with the premium, but that's the risk you take with such deals.

So why are people complaining that this is price gouging? First of all, price gouging is not really possible for luxury items like Playstations. Nobody is forced to buy a Playstation; if merchandisers refuse to sell Playstations at prices that the market will bear, they will not sell any and they will not make money. This is not like charging $6 a gallon for gas immediately after 9/11. On top of this, merchants aren't jacking up the basic retail price; they're simply offering consumers the option to pay a premium to avoid the risk of shortage.

The objections being raised to this (see the comments at the Techdirt article) are just silly. Some of them are people who seem to think that they have some sort of right to a PlayStation 3 (well, guess what, you're not). Others are quite likely speculators who are moaning over how this is going to take a big whack at their plans to buy up as many PS3s as they can and then sell them at massive markup on eBay in late December. And, of course, I'm sure the other game manufacturers are less than thrilled; consumers who elect to accept the premium offer will likely buy less of the competition's products. But price gouging? Don't be so freaking histrionic. It's just a game.