Opportunity cost is everything you choose to forgo when you choose to allocate any resources to anything. If supply and demand is allowed to have its normal influence on price, then you can decide what you actually have the most demand for, and allocate your resources accordingly. The decisions you make regarding your own needs are always going to be much more efficient than those that any rationing authority could ever make.
That presumes the outdated notion of perfectly rational consumers. Economists have discovered that consumers aren't rational anyway, but in the case of a pandemic the likes of which western consumers have never seen, I can assure you that consumers are anxious. Some consumers are even panic buying, and their purchasing habits are consequently even more irrational than usual. Even assuming you and I both manage to stay rational, other customers hoarding will affect our respective purchasing powers. (Tbh I'm not immune to group psychology which means panic buying.)
When a hoarder has a 5 years stockpile of TP and others have none, that's obviously inefficiently allocated in a time of need. Given that we've seen that the is market unable to handle panic buying and hoarding in (perceived) emergencies, strict allocation of certain necessities during an emergency really does seem like the easiest way to equitably handle the situation. More creative solutions may exist, like volume purchase surcharges, as seen in a Danish store [1], but by and large, "limit 1 per customer" seems entirely reasonable. (For whatever value of 1 is appropriate for a particular product.)
But you’re not describing an irrational actor. If the entire global economy collapsed (which is not an irrational fear to have), then having several months supply of non-perishable food, cleaning and hygiene supplies would be very valuable thing. What makes that either rational or irrational is the expense you went to purchase them. If prices are not allowed to rise to equilibrium, then that expense is going to be very minimal.
As I’ve said several times. I think it’s perfectly reasonable to ration certain staples, and essential services. Everything else should just be priced to supply and demand. It’s not reasonable to call something price gouging if there are actually shortages.
(1) That is not the definition of "opportunity cost" that economists commonly use.
(2) As I often see when people make the case you're making, you are making unwarranted assumptions about the rationality of buyers. If people are fleeing a hurricane and the gas station raises the price sharply because of the demand, what can happen (and we've seen it happen, in fact) is that it encourages hoarding: it is now a precious commodity and those who can afford to buy it do so, denying it to others.
(3) As I also often see when people make the case you're making, you're also inserting a Big Bad Government Guy into the scenario, your "rationing authority," which people making my case aren't necessarily suggesting at all: we're suggesting that it is rational for suppliers to choose to ration goods in order to be able to meet the demand of a greater number of customers, rather than to meet only the demand of shoppers who can buy as much of [thing in short supply] as possible. Again this is what we actually see in practice, at this very moment: stores in my local area limiting the number of certain items you're able to buy at one time are not doing so because they have been ordered by the California Politburo to do so, they are doing so because on balance they can serve a greater number of customers, rather than turning away literally thousands of desperate people who couldn't "allocate their resources" as well as the guy with five Ultra Transparent Titanium Master Cards.
(1) that is the precise definition of opportunity cost. It is everything you forgo the opportunity to do whenever you choose to do anything. Whether you are choosing how to spend your money, or spend your time, or devote your attention, or expend your energy. All of those are opportunity cost decision. It also includes everything you forgo for any given decision. If you choose to buy a Ford, perhaps the opportunity cost could be that you don’t buy a Chrysler. But it could also be that you don’t eat out as often, because you have to make car payments, or that you don’t buy a PlayStation. It is all of those things. This is the definition used in the field of economics.
(2) raising prices will always reduce demand, outside of the very specific circumstances where demand is inelastic. Supply and demand is an inescapable law of economics, and subverting it will always result in failures in the supply chain. The scenario you described will also not increase hoarding, it will most certainly decrease it (whether arbitrage trading crops up is a different issue, but one that is completely unrelated to hoarding).
(3) I used the term rationing authority because it was a neutral descriptor. Anybody who acts as an authority on allocation rations is going to be creating the same inefficiencies (though you’d expect the parts of the supply chain closest to the consumers to be the least inefficient)
Most of what you’ve said has demonstrated serious misunderstandings of how the basic principles like supply and demand and opportunity cost works. Your argument that raising prices increases demand should really just be dismissed off the bat.
> The decisions you make regarding your own needs are always going to be much more efficient than those that any rationing authority could ever make.
If that were true, then hoarding wouldn't happen in the first place. You're obviously wrong here, and there's abundant evidence that consumers don't always make the best choices for themselves. Try scaling back your claims to something less absolute.
The hoarders benefit massively from hoarding. They benefit from a regulation that prevents the markets from responding to shortages and spikes in demand. They have no problem whatsoever deciding how to allocate their resources in that situation, which is the entire problem, because the market doesn’t force them to.
An individual will always, every single time, without fail, know what they need better than a 3rd party who nominates themselves to make decisions on behalf of others. If you remove market forces from the situation, and establish an authority to decide who gets rationed what, it will always impact the efficiency of those resource allocation decisions.
"An individual will always, every single time, without fail, know what they need better than a 3rd party who nominates themselves to make decisions on behalf of others"
This is completely false. Most individuals in a panic buying situation never know what they really need compared to a calm, educated and knowledgeable 3rd party. This crisis has also proved your assertion wrong - witness the mass buying of perishable foods and toilet paper.
Food that was thrown out in a weeks time into garbage and food that was denied to others because of panic buyers.
> This crisis has also proved your assertion wrong - witness the mass buying of perishable foods and toilet paper.
It hasn’t at all. For starters, non-perishable food was absolutely the first to vanish off the shelves. But that aside, buying too much has no detriment at all to the purchaser. The risk that they may not consume all of it is so incredibly minimal compared to what they’re actually worried about. This is only possible because prices are artificially constrained. Most people don’t have to face a considerable opportunity cost when buy way more food than they need.