but it's not "no water available", but that the seller knows the value of water has grown due to an unavoidable problem (e.g., natural disaster). And without state intervention, the freemarket is gonna cause the price to skyrocket.
As a society, people have decided that it's wrong for price gauging.
OK, but the other side of the coin is this: Water shortages due to unavoidable circumstances happen from time to time. It's good for society to have stockpiles of water in those situations.
But here's the thing: storing that excess water isn't free. Water is already commoditized, which means it's low-margin. If you as a private business, stockpile water for an emergency but can't charge more, you're probably selling at a loss. Which means, it's not economically sustainable to stockpile -- which means, absent the government planning ahead, shortages are going to be pretty bad.
On the other hand, if you know that you can charge 4x for a bottle of water during an emergency, then you might decide to stockpile, knowing you can make your money back when an emergency happens.
So which is worse -- "price gouging" but having the water available, or not having the water available at all?
Or to put it a different way: Stockpiling for emergencies is not free, and it's of value to society. Doesn't it make sense to compensate the people who do it?
> only with the higher demand they can now sell a whole lot more of them
But they can only sell what they have in stock, which is adjusted to normal times. In the disaster they simply sell out. GP is saying the high prices in a disaster are an incentive to make various investments which won't pay off in normal times.
>> storing that excess water isn't free. Water is already commoditized, which means it's low-margin. If you as a private business, stockpile water for an emergency but can't charge more, you're probably selling at a loss.
> During a disaster they can keep selling at $X/bottle and keep making a profit
You ignored the point of the person you're replying to.
This applies to the entire supply chain, too. If there's any disruption (including increased demand), it's the stockpiles -- anyone that stores inventory beyond what they sell regularly -- that compensate. No one is obligated to do this, and there are significant carrying costs to store inventory (space, spoilage, capital tied up).
Would you shop at a store where a bottle of soda cost $1 but every hundredth bottle of the same stuff, or on Tuesdays at 4pm, was marked as $5?