> That will just raise the market price, scalpers will keep scalping and overall sales will decline.
This is not true. Market price will not go up arbitrarily. Scalpers will not keep scalping if the retail price is greater than what they can sell it for, which will happen at some point.
> This is not true. Market price will not go up arbitrarily. Scalpers will not keep scalping if the retail price is greater than what they can sell it for, which will happen at some point.
How are you using such confident language on what the scalpers in this space will or will not do base on ... what looks like Econ 101 supply / demand curves? Do you have some expertise you're not including as context here?
Yeah this a fair point, I’m coming off way too confident on a complicated topic. I’d revise my comment to say:
I think this is not true, which can be seen if you make 2 basic assumptions: 1. Scalpers want to make money and 2. There is a max price people are willing to pay for shoes. Then there will be some price Nike can set which will cause scalpers to leave the market.
Why do you think sales will decline? The difference is who makes the profit. If Nike increases prices then profit shifts from the scalpers to Nike. The same number of shoes are sold for the same market prices.
Scalpers destroy markets by injecting excess capital in the marker and creating a false price floor. The issue with scalpers is they quite often get left holding the bag, and/or hold the product for a long period of time lessening the actual demand or excitement about the product in the first place.
From what I've seen they tend to move away from markets where there's not room to make a profit, eg no arbitrage. The gp is suggesting to find that price... Or make more.
I’m not sure what you’re talking about. In this case they’re not destroying anything, they’re simply performing arbitrage because of price inefficiency.
