Wal-Mart and Costco rationing rice?

But why? Raising the price is the answer. Technically all products are rationed. By the price. Prices convey information - and consumers get the message loud and clear. As a result consumers are forced to make choices. If the price is artificially low when demand is high, consumers will hoard the product (in this case, rice). If the price were higher:

1. Consumers would replace their rice with an alternate product, thereby reducing demand and helping to alleviate the underlying problem.

2. Have an incentive to buy less rice than they normally would, thereby increasing supply for other consumers, and again - alleviating the underlying problem. Think of it as self-rationing.

3. Farmer would have more incentive to grow more rice (and they will), which would increase the supply and thus - all together now - alleviate the underlying problem.

Rationing might help the "right now" problem, but it does nothing to fix the problem in the future. The FDC is bewildered why Wal-Mart and Costco would find it necessary to use a typically governmental solution that is doomed to failure.

Free markets and the invisible hand created companies like Wal-Mart and Costco - why would they abandon the same economic principles that made them what they are today? Methinks it's a public relations move so as not to look like they are "price gouging" the poor. There is no such thing as price gouging, but that is another post for another day.

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