[KILLER74Z28]

Originally Posted by stovt001

Price gouging doesn't exist, because by definition there can be no alternative. Well there are many many many Chevy dealerships in the US (not the mention the world) and beyond that many many many many many competing products. So if people pay over MSRP, that is their choice, and if dealers accept that money, well why not? Mark ups over MSRP can exist only when demand exceeds supply. Under such a situation MSRP pricing does not provide a proper rationing mechanism. So the dealers must choose another rationing mechanism. They could do "first come, first serve" but then they are not making the full economic gain that the market allows. Very inefficient.

The other option is markups. So suppose there are 5000 people who are after 4000 cars at an MSRP of $30,000. 1000 of those customers are willing to pay $40,000. So they pay $40,000 and get the first 1000 Camaros. Now the dealer has 3000 cars at $40,000 but no customers willing to pay that price. So the dealer drops the price to $35,000. Now 2000 more customers are willing to pay that price to get cars. So now we're down to 1000 cars and no additional customers willing to pay that price. There are 2,000 customers who are willing to pay a lower price. 1000 of those customers are willing to pay $31,000. The other 1000 customers aren't willing to pay that price, so they go elsewhere. So the dealership gets rid of the last cars. The product has been rationed so demand perfectly matches supply. The dealer makes maximum profit, and no one paid more than they were willing.

So where's the problem? What's immoral about that? There is certainly nothing illegal or deceptive about it?

MSRP stands for Manufacturer's Suggested Retail Price. It doesn't mean the fair price for the vehicle. It doesn't mean what the vehicle is worth. It is just a number provided as a guideline to start building market price off of. It is just the manufacturer's best guestimate of a price that will give dealers a decent profit and what the market as a whole is likely willing to pay for the car.

BLAH BLAH BLAH... We know, we know... In layman’s terms it's still price gouging. :raises hand: can I go to the bathroom now Professor stovt001???