that this is just the kind of thing that happens when retailers are foolishly prevented (by public opinion, if not by law) from charging the true market price.
Retailer console base prices are set by the manufacturer. A first-party retailer is not allowed to charge more than the RRP as part of their agreement.
Perhaps an important economic point here is that consoles are generally sold below-cost. Console manufacturers lose money on every product they sell from hardware costs. This is because consoles make their money on games, where the margins are much fatter.
The issue here is that the manufacturers and retailers are working in a commodity mindset, whereas the market for these items has shifted away from a commodity and into a luxury due to the high demand compared to supply.
In general though, I’m optimistic about scalpers collapsing under increasing liqudity. Sony poured a lot of resources into automating their manufacturing pipeline and has been churning them out as fast as they can since day 1, with no sign of slowing. The number of consoles in the world is increasing at a much faster rate than the number of people who want consoles.
Sure, I agree that reselling will become less and less important as supply increases – presumably the prices of PS5s on eBay will fall as supply increases, until it’s close enough to the RRP that reselling is no longer profitable.
In fact, my argument above depends, among other things, on demand increasing much more slowly than supply.
What I’m interested in here is whether, given the current (temporary) shortage, these kinds of reselling practices are actually (temporarily) harmful.
(Insofar as upgrading your gaming console later than you wanted is harmful.)
Retailer console base prices are set by the manufacturer. A first-party retailer is not allowed to charge more than the RRP as part of their agreement.
Perhaps an important economic point here is that consoles are generally sold below-cost. Console manufacturers lose money on every product they sell from hardware costs. This is because consoles make their money on games, where the margins are much fatter.
The issue here is that the manufacturers and retailers are working in a commodity mindset, whereas the market for these items has shifted away from a commodity and into a luxury due to the high demand compared to supply.
In general though, I’m optimistic about scalpers collapsing under increasing liqudity. Sony poured a lot of resources into automating their manufacturing pipeline and has been churning them out as fast as they can since day 1, with no sign of slowing. The number of consoles in the world is increasing at a much faster rate than the number of people who want consoles.
Sure, I agree that reselling will become less and less important as supply increases – presumably the prices of PS5s on eBay will fall as supply increases, until it’s close enough to the RRP that reselling is no longer profitable.
In fact, my argument above depends, among other things, on demand increasing much more slowly than supply.
What I’m interested in here is whether, given the current (temporary) shortage, these kinds of reselling practices are actually (temporarily) harmful.
(Insofar as upgrading your gaming console later than you wanted is harmful.)