> But no one says there is a need for this extra liquidity.
The fact that scalpers can sell the consoles for a much higher price shows that there is no market equilibrium with respect to the prices that the console vendors set. To achieve this, console producers could choose two strategies:
a) increase production
b) increase prices
a is impossible because of chip shortages, so b would be the way to choose to achieve "supply = demand" (i.e. everybody who is willing to pay the market price will get a console). Since console producers are not willing to do this move (perhaps for "marketing reasons" à la "our console is this cheap"), scalpers will make use of this market inefficiency, and ensure that the prices are those where there is a market equilibrium.
So, scalpers change the situation from "there is more demand than supply" to "supply = demand", making the market balanced.
Thus, the existence of scalpers is rather are sign that the console producers chose a price that is too low. The existence of scalpers is thus a mere symptom of this bad pricing decision of the console producers.
> You've made the assumption that the supply status quo would exist without scaplers actively exploiting the market en masse, and I beg to differ...the difference is, as of this minute, I can point to over 5,600 reasons on eBay US alone[1] that support my argument.
The scalpers don't destroy the consoles any more than they create them. All they're doing is spreading out the supply over maybe a few weeks - they'll be pricing them to sell before the next shipment from Nintendo arrives. Or else they've made a mistake and are going to lose money for it, which is fine too. Maybe some scalpers are holding onto them for the Christmas rush, but that's just the difference between the console sitting on the scalper's shelf or sitting in a box under the tree - it makes no odds either way.
> You've clearly defined the value added in importing a product to a market where it's not normally sold: work which directly increases product availability.
Scalpers are just import/export across time rather than across space. If it weren't for scalpers there wouldn't be any of this console on sale right now, it'd just be sold out everywhere.
> Scalpers do neither and instead play an unaccountable game of double penetration: first by creating artificial scarcity in the market, then again by immediately relisting at 10-fold markup within the very same market they've negated.
I very much doubt the scarcity is artificial. Scalping is too competitive, too easy a market to enter, for anyone to be cornering the market.
> Irrelevant. You are, of course, entitled to your own valuation of the product.
My point is that it's yacht-like (or, sure, like a $60 trinket rather than a $60k one - let's say a Mont Blanc notebook) rather than food-like. No-one physically needs it, no-one deserves it at a below-market price.
> Nintendo--who has made real investments in and rightfully owns the IP rights to--on the other hand, has clearly valued it at $60 for its end user, profit markups at the OEM and authorized distributor levels included.
Nintendo (who FWIW are notorious for price-fixing and bullying retailers, "losing" shipments for those who don't cooperate) don't get to choose how much people buy or sell the products they own for; it's a free country. If Nintendo can really produce it for less than $60 then they should be selling it for $60 and making money. But they've sold all their stock, and the demand is still there.
>by making it difficult for manufacturers and retailers to manage demand effectively
This doesn't add up.
Every person who buys a PS5 from a scalper for $700-$800 would also buy it for MSRP at $500, unless they are insane. Demand would outstrip supply even in the absence of scalpers, because one PS5 would be bought at MSRP from a retailer for every one that would have otherwise been bought and then sold by a scalper.
The only kink is that because PS5s immediately sell out at a price of $500, people who don't have the time to camp checkouts and/or want the item immediately are shit out of luck. However, they could pay a scalper an extra $200 to do that for them, because that's the value of the time they would lose acquiring the PS5, or the value they would miss out not having the PS5 immediately. In economics parlance, this is a service. You can call it something else if it makes your feel better. Either way, scalper activity cannot oversell the demand for a PS5 beyond not accurately modelling the sales you would lose from customers not wanting to deal with the effects of illiquidity on the market. The only thing scalper activity misrepresents if your MSRP is below what they're charging is the customers who won't buy your product at all if you're constantly sold out. Scalpers do not change forecasts.
> I'm not arguing people aren't willing to pay more. I'm pointing out that the scalper is providing nothing of value to anyone but himself.
How is the scalper different from the retailer or the distributor (assuming there's a distributor between Sony and the retailer, although their might not be)
The scalper is providing value to the retailer by paying for and taking delivery of their inventory (although, if the scalper overbuys and then returns, that's a negative); although, if the demand is so high that the product never sits on shelves, the scalper doesn't provide much value to the retailer.
The scalper provides value to the customer by having inventory available.
I personally don't like to pay more to get something now, when I could wait and get it later for less, so I wouldn't buy from a scalper, but I can see there's value provided. The market shows there's value too.
Ethically, as long as you're honest about it, and personally, that would include not returning items you overbought, I'm not sure I see an ethical problem. If something is hard to find, and you take time and effort to find it, you can and should charge a premium to compensate you for your time. Sure, people buying to resell may move forward demand, and make the item harder to find, and that feels a bit squishy, kind of like if everyone stocks up on a commodity at once, it makes it harder to find, and makes stocking up more desirable, etc, but eventually people have enough and there will be a lull and then back to normal. Does that make stocking up unethical? I don't think so, but maybe it could be argued.
>The scalpers can absorb the rising prices until the desperate companies no longer can afford the increase
The whole point is for manufacturers to raise the price until desperate companies/consumers can no longer afford it and don't buy them. Im not sure where scalpers come in. If prices are set high enough, scalpers can't make a profit.
>Scalpers buy up GPUs. There is less supply. That creates a problem.
Those GPUs are then sold immediately to real users. Scalpers do not increase demand.
Scalpers provide a service. They have automation or a way to buy stock fast at MSRP or closer to MSRP. Then they sell it to people who are willing to pay more in order to have the product now or avoid spending time to search for stock.
Scalpers cannot exist unless demand is greater than supply.
Such a predictable hackernewsbro libertarian response. Scalping hurts markets and only benefits rent-taking middlemen who provide no value. There is no liquidity issue to resolve, and scalper is a negative feedback loop that hurt avaialability. You're right that suppliers could simply jack up prices to fill the supply/demand gap, but there's a reason they don't do this: supply crunches are temporary. What do you think it would do to MS or Sony branding and reputation if they temporarily jacked up prices to meet this gap in the short term?
> People who really really want the product get it at a fair price (they were willing to pay).
If people were content to get the product at a fair price, scalpers wouldn't be a problem in the first place. The whole reason scalpers are considered a problem is that people want the product at a cheaper than fair price, and scalpers prevent that by buying up any inventory that is being sold for below the market rate.
Basically, if companies employed the strategy you suggest, then they'd effectively become the scalpers in the eyes of people who consider scalping a problem, with all the PR issues associated with that.
That's not to say it's necessarily a bad idea though. Once you accept the fact that scalpers exist, it makes sense for companies to capture those profits themselves rather than let scalpers just have them for free.
Okay, let's discuss ethics. I don't see or have an ethical problem with this. Scalpers are taking a risk, if the supply was greater they lose, if the supply becomes greater before they can move their inventory then they lose. The supply is not greater. It is an amoral reality.
> I'd like to live in a world that isn't full of selfish assholes trying to fuck everyone else over all the time. I understand market dynamics just fine - I got rich from it and I'm a shittier person for it.
It is not possible to live in a market based economy and fulfill that desire. It is very easy for me to accept that. Demand for the asset simply has to dry up. It has not. People that want a PS5 can get one, at the available price. Scalpers are providing liquidity, you provided liquidity. Individual owners would be removing liquidity, likely causing greater premium in price to let one go and further hoops to jump through.
> That’s a bit of a straw man, literally no one considers that scalping. It’s generally understood to mean buying more of scarce product than you could ever possibly need with the intent to sell it at a massive markup.
That is by no means the accepted definition, nor an apt description. I know people that bought two PS3's when they came out in 2006, one to play, one to sell. That is generally accepted as "scalping", but they were not buying more than they could ever possibly need.
Many, many people that participate in the resale market are people acting like this. They buy tickets for themselves and some extra ones while they're at it because they were lucky enough to by available at the right time and/or get lucky. Sometimes they also do it for the occassional event or good they don't plan to use.
These are "scalpers" in every single single sense of the word, and the only difference between them and someone that makes a business out of it is scale.
> Scalpers are parasitic rent seekers in the digital age. They do nothing to improve the logistics or liquidity of markets. They merely seek to monopolise supply to extract profit from consumers for a product they did not produce.
Scalpers are just brokers that work in a different product. They make money by arbitrage, where the primary sales market is underselling a good compared to the secondary sales market. Additionally, they provide accurate market pricing because people responsible in the primary market don't want to for whatever reason (common ones includes upsetting ones fans, it being more work, harder to work out contract payments, etc).
And lest you think it's easy to just point at scalpers/brokers and at all the money they make because they're selling a $50 ticket for $200, consider that those are the extreme cases, and relatively few tickets go for that. There's also many tickets that go under cost. In the same event. By significant amounts. It's not uncommon to get tickets for 20% cheaper on stubhub. In some cases, when brokers have bought tickets and the event didn't sell out, you can find tickets for single digit dollars that went for $40+ originally.
I've talked about this before here.[1] In that example, I pointed to the market conditions for a specific event at that exact moment, where the primary market (TicketMaster) wasn't sold out and charging $39.50, TicketMaster's own secondary market was charging $36.50 for the same tickets, and Stubhub was charging $27. Who reaps the benefit of getting tickets for more than a 25% discount? Who do you think ended up paying for that? Where do you think the funds came from to pay for that? (here's a hint, you need to make an occasional 200%-300% profit in that business to break even over the long run in a lot of cases)
Here's another question, why and how is this different than the stock market, and in the ways it's different, how does it matter to the perspective you're expressing?
> ...whoever bought it at the discounted price may not be willing to sell at any reasonable price. At least if scalpers get the item you know that they have little incentive to keep it for themselves.
If they're more interested in keeping it for themselves than selling it at a price the prospective buyer is willing to pay, then obviously that's not a problem. They don't value it as much as it's actually worth to the current owners, ergo no more efficient market allocation is possible.
It's a weird, cargo cultish notion of markets where asking prices are only "reasonable" if the only value an item has to its owner is how much they think they can gouge others for, and people refusing to sell items at a price because they have more incentive to keep it for themselves is seen as a problem! The actual deadweight losses are incurred when the opposite takes place: scalpers don't enjoy the stock but do restrict others from enjoying it.
The only situation in which scalpers actually help you buy something you couldn't otherwise have made an acceptable offer for is if lots of people value something at more they can actually afford, and scalpers inserting themselves in the middle prevents them from getting their hands on it at a price they could afford. But that shift in allocation isn't pro-market, it's anti poor.
Otherwise, if you can't buy it, that's because you're the one that's not willing or able to pay what it's actually worth
> Demand would be met with an increase in supply, satisfying all needs for the product and without the "help" of scalpers who sidestep supply-and-demand by artificially creating scarcity to drive up demand for their own profit. This is no help to anyone but themselves.
There's no "artificial" demand. Think about it - the "scalper" isn't going to buy something that they can't sell on, they'd just lose money that way. (Maybe some of them make bad judgements - but they'll naturally go out of business in that case).
> If there's a legitimate demand that will be used, then there's a good case for production to be increased to meet such demand, and all parties who need something would have their needs met.
"Scalpers" improve the quality of that signal and make it easier to increase production with confidence.
> This is also known as cornering the market, a well-known and despised practice
Views on true corners are certainly mixed (there's an argument that it punishes dishonest market makers), but in any case it only applies to buying up the whole supply, which no individual "scalper" does or can.
> It's rather the opposite. They control the supply by creating artificial scarcity
The scarcity is real. Scalpers sell the time and effort required to obtain scarce items.
>Now put in there a scalper, that is, a middleman who buys almost all Decks at the price (or rather at a discount), then keeps them in storage for a while.
This isn't happening. The value of the Steam Deck to a scalper goes down every time one is manufactured. They have to flip them as soon as possible to profit unless they somehow plan on buying all of the steam decks in perpetuity.
This isn't like concert tickets where there's a finite supply. Scalpers can't buy a significant amount of Decks because valve is just going to keep making them and selling them for less than the scalpers.
> the middleman added some value
Scalpers do add value. Think of it like paying someone to stand in line for you but not in advance.
>> Tickets that can be scalped were priced at below what you might naively consider "market" prices.
Maybe. The scalpers are taking a risk buying tickets they may not sell, so it might serve as a mechanism to find the market price for the tickets. OTOH it also creates artificial scarcity which artificially raises the price.
In the end, the scalper is inserting themself into a transaction between two parties that didn't ask for them to do so and were mutually satisfied with the situation prior to that (nothing changed for the seller, and I think most buyers would appreciate the lower price).
:) In related news, Nintendo Switch scalpers really do want everybody to be able to get a Switch, just as long as increasing production doesn't affect any of the prices they can charge in Ebay auctions.
> Not entirely true, and also not accepting that one person's "scalper" is another person's "bought this but decided I would rather have the money it seems to be worth now that I see how much this is".
That’s a bit of a straw man, literally no one considers that scalping. It’s generally understood to mean buying more of scarce product than you could ever possibly need with the intent to sell it at a massive markup.
Scalpers are parasitic rent seekers in the digital age. They do nothing to improve the logistics or liquidity of markets. They merely seek to monopolise supply to extract profit from consumers for a product they did not produce.
The fact that scalpers can sell the consoles for a much higher price shows that there is no market equilibrium with respect to the prices that the console vendors set. To achieve this, console producers could choose two strategies:
a) increase production
b) increase prices
a is impossible because of chip shortages, so b would be the way to choose to achieve "supply = demand" (i.e. everybody who is willing to pay the market price will get a console). Since console producers are not willing to do this move (perhaps for "marketing reasons" à la "our console is this cheap"), scalpers will make use of this market inefficiency, and ensure that the prices are those where there is a market equilibrium.
So, scalpers change the situation from "there is more demand than supply" to "supply = demand", making the market balanced.
Thus, the existence of scalpers is rather are sign that the console producers chose a price that is too low. The existence of scalpers is thus a mere symptom of this bad pricing decision of the console producers.
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