Profit from Covid-19 profiteers, with the help of regular market forces

THE spread of the Covid-19 coronavirus has led to a severe global shortage of face masks as panicked consumers stockpile them. Understandably, the Singapore government has decided to clamp down on the many profiteers locally selling masks at unusually high prices. Minister Chan Chun Sing recently announced that the government would come down hard on profiteers who charge unreasonable prices, including through a "government price controller".

The government's aim is praiseworthy, especially if one considers the many who struggle to make ends meet and who are not privileged enough to have special access to masks. However, the blanket condemnation of profiteering may inadvertently do more harm than good, because it stifles the very market forces needed to address the shortage in the first place.

While higher prices are painful for consumers in the short term, they play an important function in incentivising suppliers to come to the market and thus alleviate the dire shortage we face. This is especially needful, given that the fight against coronavirus will last months to come, and will require medical manufacturers to make these resources available.