The Economics of Toilet Paper During COVID-19

Econ 101

Supply and demand is arguably one of the most important concepts in economics. When demand increases (or skyrockets as in the case of the COVID-19 panicking), it takes a minute for supply to catch up.

When supply is trying to catch up with demand, there is a shortage of goods. When there is a shortage, the price for that good goes up.

We want this price increase to happen. If it doesn’t, then there won’t be a shortage – there will be absolutely no supply at all.

The Economics of Toilet Paper During COVID-19

Toilet paper, like any material good, does not just magically appear off of a tree. It takes manufacturing and transportation to get it to reach your store. This incurs cost. Cost for the drivers, cost for the manufacturer, cost to pay the employees to work extra hours to make more of the good, et cetera.

When demand is high, the price needs to increase to match the limited available supply. Otherwise, hoarders (like we have witnessed) will just buy all of it at the low price. Additionally, manufacturers won’t have an incentive to make more rapidly. If price is up, they absolutely have that incentive.

Following these economic principles ensures we actually meet the demands of the economy in the fastest amount of time possible. More people will get toilet paper, faster.

If we enforce price controls less people would get them as supply would decrease exponentially faster.

This is true of any commodity such as toilet paper, hand sanitizer, disinfecting wipes, or paper towels.

It is sad I even have to make an argument about this. But largely, I need it to reference to the economically-illiterate that keep regurgitating the same BS such as this guy:

It is honestly criminal that cleaning companies are withholding supplies, furthermore charging more for it. This kind of debauchery is fit for some evil comic book villain, not for a required commodity.

It’s not hard to find other comments like his/hers. Look at any news article on the current shortages from the COVID-19 crisis. You’ll find hundreds like this with hundreds of likes and up-votes.

Let’s make it clear: it is not criminal for companies to be following the basic principles of economics. It’s basic supply and demand, stupid.

Also, can we address that toilet paper, Clorox wipes, and hand sanitizer are not essential goods (or “required commodity”, as that person put it)?

Pretty sure our modern day luxuries are not essentials. Use a bidet. Wipe down surfaces the old fashioned way. Use your rags. You’ll survive for two weeks.

And if you buy any of those non-essential goods before the crisis blows over, you should pay more for them. It’s just basic economics.

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