Saturday, July 26, 2014

Drug shortages?

This article in Reader's Digest reports that shortages for many drugs exist and that the number of shortages may grow.

This is an excellent introduction to how prices move in markets. What do economics textbooks say happens to the market price when shortages exist? Why doesn't this happen in the markets described by the article?

It is also an excellent introduction to a discussion of the role of "money" in a market system. The articles says the first reason for the shortages is "all about money". The implication is, I believe, that a quest for profit creates the shortages. Does a quest for profit create shortages in markets where price may move freely? If not, does the quest for profit reward "good" behaviors or "bad" behaviors?

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