Hurricane Harvey and the Failure of the Free Market
Paul Constant
3.2K68

One effective alternative to rationing goods in limited supply is a 100% excess profits tax. The seller can charge anything he wants but 100% of his profits above a reasonable “cost plus” level are taken away in taxes. When faced with the loss of monopoly profits sellers quickly revert back to reasonable pricing AND ALSO they strive to increase supply. When allowed to charge monopoly prices, sellers have a strong incentive to REDUCE the supply. See my post:

A Pragmatic Look At Market Pricing. Market Pricing Both Efficiently Allocates Scarce Resources And Exacerbates The Scarcity Of Those Same Resources