News PS5 Scalpers Explain How They Can Sleep at Night

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I'm not ignoring it; I've pointed it out repeatedly over the last few months. I then follow by noting that it's due to attitudes such as those displayed on this message board that make manufacturers chary of setting the price appropriately, despite the benefit to consumers.

In any shortage situation, some potential buyers will get product, some will do without.

In the absence of scalping, those who get product are the result of sheer luck, or, in the best case, a "first come first served" model. That may appeal to naïve beliefs of fairness, but long economic history has taught us that the most effective, efficient system is when (excluding a few life-essential commodities) products go to those willing to pay the highest price. Scalpers ensure that happens. If you're willing to pay $1000 for that console and I'm not, then either (a) you want it more than I do, or (b) you have much more money than I do, and so you value $1000 in cash less than I do. Either way -- you getting the console is the better solution.
Economic theory/law is a series of rules based on observation of human behavior, not causal of the behavior itself. In a vacuum of ethos "The invisible hand" operates in a predictable manner as you describe. What you call to be the most efficient is far from it. Economics require that optimum efficiency has no deadweight. Scalpers profits are deadweight. If history has taught anything it is this. Whenever there is an exploitable edge to work you will always find someone with the lack of ethical fortitude to take advantage of it. It is because of this that almost all consumer protection laws exist today.
 
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Economics require that optimum efficiency has no deadweight. Scalpers profits are deadweight.
(Emphasis added.) Correct. However,

a) Scalping is not optimum efficiency, but it is more efficient than the alternative. Optimum efficient (as I've said repeatedly) is for manufacturers to raise prices to eliminate the shortage altogether.
b) If scalping is unethical, so is every grocery store, clothes retailer, and distributor in the world. They're all middle-men, who profit from price differentials. Furthermore, any person whoever buys anything from a house to a collectible card or toy, then eventually resells it for a higher price is also engaging in unethical behavior. Do you believe this?

I won't attempt to dispute whatever definition you hang upon the word "ethics", because ethics is an opinion, whereas economics is based upon facts. However, whatever definition chosen should be consistent, no?
 
(Emphasis added.) Correct. However,

a) Scalping is not optimum efficiency, but it is more efficient than the alternative. Optimum efficient (as I've said repeatedly) is for manufacturers to raise prices to eliminate the shortage altogether.
b) If scalping is unethical, so is every grocery store, clothes retailer, and distributor in the world. They're all middle-men, who profit from price differentials. Furthermore, any person whoever buys anything from a house to a collectible card or toy, then eventually resells it for a higher price is also engaging in unethical behavior. Do you believe this?

I won't attempt to dispute whatever definition you hang upon the word "ethics", because ethics is an opinion, whereas economics is based upon facts. However, whatever definition chosen should be consistent, no?
There is no point in arguing this any further. The difference between retailers and scalpers is that retailers actually provide a service. That service is to make goods locally available to the general public for consumption. Scalpers bring nothing to the table. All they do is drive prices up and exploit/create shortage which makes them a public menace. Resale in itself is not unethical. Purposely using automated tools to exploit, extend and in many cases create a shortage for personal gain is however. Again as I said earlier economics are based on observation. All they tell us is what human consumption patterns will be at our base state. They tell us nothing about what the right thing to do is. That is domain of ethics (of which law is based on), while a matter of "opinion" they are the common ground on which all society itself exists. Without them I would simply take your new PS5 by force and not worry about the effect of the supply and demand curves at all. Whenever ethical exploits present themselves in a system they are either ignored or outlawed. I am simply advocating outlawing this one as technology has moved it from a nuisance problem to a widespread issue that continues to grow.
 
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Scalpers are really low life characters.

I having been trying to get a ps5 for a few months now and it is almost impossible.

I feel even worse for the kids who could not have one for Christmas because scalpers are snapping them all up. Naughty.
 
Scalpers are really low life characters.

I having been trying to get a ps5 for a few months now and it is almost impossible.

I feel even worse for the kids who could not have one for Christmas because scalpers are snapping them all up. Naughty.

Absolutely agree.
Finally got my series x this week after a 2 month wait.

As a slight bonus my old launch model xbox one (which will be getting sold) is now worth twice as much as it was before Christmas 🤷‍♂️ go figure, world's gone mad.
 
I feel even worse for the kids who could not have one for Christmas because scalpers are snapping them all up.
And now comes the predictable appeal to emotion. You're not upset for yourself, you're just concerned for the children. 🙄

I'll bet any sum you care to wager that scalpers increased the number of children who got consoles for Christmas. A busy working parent doesn't have the time to wait overnight in a line at Best Buy or loiter nonstop on a website purchase button -- but they can afford to buy one off Ebay. So the overall result was that some millennial snowflakes with severe entitlement-syndrome did without PS5s, in favor of the children of upper middle-class working parents. As you care about the children so much, that should make you happy.
 
I'll bet any sum you care to wager that scalpers increased the number of children who got consoles for Christmas. A busy working parent doesn't have the time to wait overnight in a line at Best Buy or loiter nonstop on a website purchase button -- but they can afford to buy one off Ebay. So the overall result was that some millennial snowflakes with severe entitlement-syndrome did without PS5s, in favor of the children of upper middle-class working parents. As you care about the children so much, that should make you happy.

And there we go, over the cliff....
 
Scalpers are modern equivalent of plague. They provide no benefits to society. They provide no convenience of store they are saying puts up big margins too. They just buy up all supply and inconveniently increase prices for their own selfish profits. And I do hope they get regulated, because if that is supposed to be good, which is the biggest crap I ever heard and only makes sense to stone cold capitalists who would love to walk over your corpse if that brought them more money, scalping should definitely be dealt with. Because scalping is nothing more than taking advantage of people and bad situations and just ripping people off. And sure, if they can't do it legally they will do it illegally, but at least it will be illegal and there will be consequences.
 
And there we go, over the cliff....
Couldn't formulate a rational rebuttal, eh?

Absolutely agree....As a slight bonus my old launch model xbox one (which will be getting sold) is now worth twice as much as it was before Christmas
ROFL, so one paragraph after condemning scalping, you're gleefully chortling over the scalper's price you'll receive from your older console?
 
Scalpers are modern equivalent of plague. They provide no benefits to society. They provide no convenience of store they are saying puts up big margins too. They just buy up all supply and inconveniently increase prices for their own selfish profits. And I do hope they get regulated, because if that is supposed to be good, which is the biggest crap I ever heard and only makes sense to stone cold capitalists who would love to walk over your corpse if that brought them more money, scalping should definitely be dealt with. Because scalping is nothing more than taking advantage of people and bad situations and just ripping people off. And sure, if they can't do it legally they will do it illegally, but at least it will be illegal and there will be consequences.
But I don't see it that way. People have the right to make money at other peoples expense. They have the right to sell it at insane markups and I along with others have the right not to buy it. I won't encourage that behavior so i'll pass. But to make laws to ban scalping which has been going on for much longer than i've been alive (62yrs) is fools gold because there's always some way to side step the law(s).

It's been said and i'll say it again, neither console is worth getting hot and bothered about because there aren't that many games worth buying it for.
 
You did the equivalent of saying that the tooth fairy is real. That somehow, scalping made things BETTER.
So myself -- along with several hundred university professors and Nobel laureates in economics -- all believe in the tooth fairy, while you have the one true word straight from God himself. And your hatred of scalpers has nothing whatsoever to do with their effect on you personally. It's a purely rational, disinterested belief, right? 🙄

I'll repeat. Scalpers helped a lot of children get consoles for Christmas. Undeniable. Since you're unaware of the enormous body of research on allocational efficiency, I'll state another undeniable fact. Those complaining the loudest about scalpers here are among the first one who, if their current graphics card fails, will speedily and gratefully turn to eBay, glad to have the option to purchase a replacement, rather than spending a few months staring at an out-of-stock tag on Newegg. Scalpers are helping them also.

Now, you may resume your howling at the sky.
 
So myself -- along with several hundred university professors and Nobel laureates in economics
Please cite sources.

And your hatred of scalpers has nothing whatsoever to do with their effect on you personally. It's a purely rational, disinterested belief, right? 🙄
I'd use the word disgust rather than hatred. Otherwise, that is correct. It has nothing to do with their effect on me personally. More correctly, lack thereof. I wasn't in the market for a GPU.

I'll repeat. Scalpers helped a lot of children get consoles for Christmas. Undeniable. Since you're unaware of the enormous body of research on allocational efficiency,
Please cite sources.

I'll state another undeniable fact. Those complaining the loudest about scalpers here are among the first one who, if their current graphics card fails, will speedily and gratefully turn to eBay, glad to have the option to purchase a replacement, rather than spending a few months staring at an out-of-stock tag on Newegg. Scalpers are helping them also.
Please cite sources.

If I sound repetitive, it's because you are repetitive. You repeatedly stand by the same belief centered about the "free-market" even with topics not related to scalping. You state a lot of things, yet, you never cite sources. You simply expect us to take your word for it.
 
Please cite sources.
I could scan my course notes from my decades old class taught by a Nobel laureate. Or quote Milton Friedman, another Nobel prizewinner, that so-called "price gougers save lives". Or I could direct you to any standard economics text on allocative efficiency. But since you demand more immediate gratification, let me see what I can scratch up:

Course notes from Cornell University Econ 2040: "While ticket scalping may seem unfair or unethical to some, it is a necessary process to clear the market...."
U. Penn. Wharton School of Business (#1 Graduate Business School in the Nation): "Frustrated by Surge Pricing? Here’s How It Benefits You in the Long Run"
L. Carneglia, Econ Professor at Valencia College: "Price Gouging During Disasters Is Actually a Good Thing". This article speaks specifically about scalping of gas and water after natural disasters, but the concepts apply equally to GPU scalping during pandemics.
Depaul Law Review: "How Modern Trends and Market Economics Have Rendered Anti-Ticket Scalping Legislation Obsolete " (lengthy; you may wish to skip to the conclusion. Again, ticket scalping is no different in concept than console scalping)

There are literally tens of thousands of similar sources. You wouldn't even ask the question, had you ever taken an advanced economics course. Some economists debate the benefits of unrestricted price hikes for food and water and other basic necessities -- but there is no debate whatsoever that the "scalping" or "gouging" of entertainment items is socially and economically beneficial. None.
 
Immediate gratification is expecting everyone here to take your word for it.

Still, I think I see what you're saying - if you want to look at it from a "strict economic efficiency" or "clearing the market" point of view, sure, there's an argument to be made. Maybe.

The argument is too narrow. Sure, it might equalize some nebulous idea of supply and demand, but you (and presumably all the economists you linked to, I glanced over them and focused on the conclusions) assuming that "oh, it's the free market, it's automatically right." They're only offering speculation.

They also fail to take into account the "empty seats" issue (or in the case of the consoles that are currently off the market, or being held by scalpers waiting for higher prices, the delayed subscriptions and game sales effect). Seems like you're more interested in "focus only on the free market, don't look at any outside effects beyond the immediate sales" portion. Don't the empty seats/delayed games+subscriptions sales reduce this vaunted "market efficiency" you're claiming?

But all of that is a digression, as if you were blending my questions with arguments you had with other posters. Did you forget your original assertion already? Despite your walls of text, you still said 25-30% would be all it would take to balance things out and eliminate. I still call BS on that one. If that were the case, then why are scalpers able to easily get so much more? It fails to address the issue of "do you see any anxious scalpers sitting on unsold inventory wringing their hands?"
 
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Stealing this idea from a comment I read elsewhere.

Capitalism works when each layer between the producer and the consumer generally adds value to the product. It's when one of those layers does not add value to the product that we have a problem. So far I see no value for the most part that scalpers add to the product to justify them existing as yet another layer between the producer and the consumer.
 
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I feel even worse for the kids who could not have one for Christmas because scalpers are snapping them all up. Naughty.
Scalpers aren't buying consoles then tossing them in a closet hoping they go up in value in a few years. They turn around and sell them immediately, so they aren't preventing kids from getting them. They're preventing kids with slightly less rich parents from getting them. I say less rich parents, because poor parents are going to spend the MSRP of $500 on a console either.
 
Couldn't formulate a rational rebuttal, eh?

ROFL, so one paragraph after condemning scalping, you're gleefully chortling over the scalper's price you'll receive from your older console?

Chortling? No

I've sold it for £100 (a fair price) to someone who will appreciate it and couldn't afford any more even though I could have gone to a CEX store and got £166 for it and they would have gone on to sell it for £30 more.

That's because I have morals that the scalpers are sorely lacking.
 
I glanced over them and focused on the conclusions) assuming that "oh, it's the free market, it's automatically right." They're only offering speculation.
Those are popular articles, written for laymen. The economics literature itself contains a vast amount of data, and detailed case studies, all leading to one and the same conclusion.

But all of that is a digression...you still said 25-30% would be all it would take to balance things out and eliminate. I still call BS on that one. If that were the case, then why are scalpers able to easily get so much more?
I'm glad you asked. My estimate was off-the-cuff, but it was based on an axiom of arbitrage, and a differential equation connecting price to market size disparity. Let me walk you through the justification, and I think you'll agree on at least the underlying premise.

Let's consider the two extreme cases: the first in which scalpers are filling the entire market, i.e. if you buy, you must buy from a scalper. Obviously in that case the only price guaranteed to entirely eliminate scalping is the charge the exact price that scalpers are. Agreed?

Now, the other extreme. To make it concrete, consider that Sony has sold 5M consoles and, of that number, only one single buyer worldwide was left out; all other potential buyers received a console. The global market for scalping is thus a single unit. Now, this 5 million and first buyer might be willing to pay barely over retail price, or he might be willing to pay tens of thousands of dollars -- we don't know. But had Sony simply raised the initial price of those first 5M units very slightly, some tiny fraction of those 5M buyers would have chose to not buy. That's inherent in the law of demand ... a change in price must cause some corresponding change in quantity demanded. If those initial 5M customers were all willing to may substantially more than MSRP, then our initial assumption that demand was (almost) perfectly filled would be invalid.

So in one case you must move 100% of the way to the scalper's price to eliminate scalping, in the other, only very slightly (an infinitesimal in the ideal case; more, but still tiny in the real world). There's a smooth continuum connecting those two cases, controlled by the disparity in the two market sizes. (I'm ignoring deadweight losses and some externalities, but those further reduce the price necessary to eliminate scalping.) My statement that in this case, an increase of roughly half the scalper surcharge would be sufficient is based on that estimate.
 
"Profiteering: n. The act or practice of seeking profits through the sale of scarce or rationed goods, especially during times of crisis or emergency."

Thanks for that, I had no idea what profiteering meant.

You're clearly not listening at all

I sold the xbox for £100

Cex are buying second hand xbox's for £166 and reselling for £250.

What I sold it for is what it's worth, probably a little less in all honesty as it went with 3 boxed disk games.

How am I profiteering exactly?

I absolutely loathe profiteering, I absolutely loathe seeing anyone getting ripped off for goods or services.

Its all that's wrong with the world today imo.

That £66 means little to me in the grand scheme of things, I'm not rich but comfortably we'll off financially.

However seeing someone have to pay £250 for something that's worth half would get my blood boiling.

I sold a gtx 970 for £60 to someone before Xmas, simply because they were building a second hand pc for their 12 year old daughter , are not at all well off financially and didn't have money to spend on anything new considering the GPU situation.

Once again I could easily have got double that amount elsewhere.

The fact is though I paid £150 for that card 4 years ago, once again I sold it at more than a fair price

I can happily take the moral stance in a thread like this without fear of recrimination.

Reading one comment made earlier and then automatically assuming I'd be taking advantage of the situation shows your own moral standing and ethics way more than mine.
 
But I don't see it that way. People have the right to make money at other peoples expense. They have the right to sell it at insane markups and I along with others have the right not to buy it. I won't encourage that behavior so i'll pass. But to make laws to ban scalping which has been going on for much longer than i've been alive (62yrs) is fools gold because there's always some way to side step the law(s).

It's been said and i'll say it again, neither console is worth getting hot and bothered about because there aren't that many games worth buying it for.

Yes, they do have right, unless some legislation passes. Because yes, problem existed, but it wasn't same. Today we have internet, where one can quickly mass buy with bots, literally stealing items from carts of other customers. Scalpers are like I ran into store, bought all milk, then run around stealing all milk from carts so I could sell it at inflated prices. But before that, without internet you could at least go to shop far enough to where I couldn't buy everything up. With internet, supply everywhere will dry up very easily. Which makes scalping much bigger problem. Plus consoles aren't in isolation here, you are right about that. Which us even more reason why it should get regulated, do at least sites like eBay or Amazon start taking scalpers down. Again something they didn't have in the past and makes scalping bigger problem.

As for consoles, again, I agree. But just because I am not lining up to buy one, this doesn't mean I should be fine with what is going on. And if course I would recommend against buying them. But then again, I am not a problem here. Its for example parents who don't know better and really want to buy their kid latest console, but can't avoid scalper prices, for example. And it is bit hard to explain to a kid how Grinch came and stole his present and is now selling it at exorbitant price. Just saying.

Plus I think scalpers deserve bad reputation they got. They provide no service or convenience to the society. And as all other greedy people, be Jeff Beside, Ajit Pie or Bobby Kotick,... you can't have both, be greedy profiteering scum and have good reputation, pick your poison, I guess.
 
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Yes, they do have right, unless some legislation passes. Because yes, problem existed, but it wasn't same. Today we have internet, where one can quickly mass buy with bots, literally stealing items from carts of other customers. Scalpers are like I ran into store, bought all milk, then run around stealing all milk from carts so I could sell it at inflated prices. But before that, without internet you could at least go to shop far enough to where I couldn't buy everything up. With internet, supply everywhere will dry up very easily. Which makes scalping much bigger problem. Plus consoles aren't in isolation here, you are right about that. Which us even more reason why it should get regulated, do at least sites like eBay or Amazon start taking scalpers down. Again something they didn't have in the past and makes scalping bigger problem.

As for consoles, again, I agree. But just because I am not lining up to buy one, this doesn't mean I should be fine with what is going on. And if course I would recommend against buying them. But then again, I am not a problem here. Its for example parents who don't know better and really want to buy their kid latest console, but can't avoid scalper prices, for example. And it is bit hard to explain to a kid how Grinch came and stole his present and is now selling it at exorbitant price. Just saying.

Plus I think scalpers deserve bad reputation they got. They provide no service or convenience to the society. And as all other greedy people, be Jeff Beside, Ajit Pie or Bobby Kotick,... you can't have both, be greedy profiteering scum and have good reputation, pick your poison, I guess.
The best way to negatively impact scalpers and bots is "self restraint". Don't buy their goods, let their inventory pile up and let their losses grow. That's how you discourage and put an early end to bots and scalpers. Creating laws won't work because the authorities can't trace cash or the exchange of goods. Now if the world banned physical currencies then the laws could be easier to enforce because the authorities could track the sale.

But we get the part about scalpers and their motives and they need to be wiped off the face of this planet. However it's not the scalpers who are the problem but those who lack the restraint or self discipline. When someone sees a scalper selling a boatload of tech goods on Ebay for a huge markup, it encourages them and others to join in.

What we have today is a lot of people with too much idle time because of lockdowns. In cases some of those individuals don't have to pay rent because of State and Federal laws not allowing landlords to evict tenants during the pandemic who are out of work and some of these individuals are even collecting unemployment insurance and stimulus checks. That's a recipe for buying from scalpers because they consider it free money.

I am not making excuses for bots and scalpers. What they are doing isn't cool or nice. It's the people who buy from them who are making the problem even worse.
 
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