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Ammunition… Ammunition… and More Ammunition

The primary driver of the firearm ammunition shortage is driven by the reports of excess government buying of ammunition, fears of the repeal of the second amendment of the constitution, and the recent state laws limiting gun ownership.Image The resent state repeals of the gun laws are in “Connecticut, Hawaii, Massachusetts, New Jersey, California, Illinois, New York, and D.C, and Montgomery County, MD” (Amselle). Thus creating a fear but also the desire to individually stockpile ammunition. The result of this fear has lead to severe shortages of ammunition not just locally, but also nationally. The response to this fear is by the gun stores or ammunition dealers. They have to decide to either raise the prices to the point of price gouging, or limit the number of boxes each costumer can by each day. Economically price gouging is the most efficient example of the supply and demand relationship because the price will rise to a point that the individuals stock piling the ammunition will stop buying them because they are too expensive. Then in results, only those who need the ammunition will pay that high price for it. When it gets to that point, the inventory will begin to increase at the dealers so that the owner will begin to reduce that price to turn its inventory back around. Thus, you have a true market supply and demand equation. In rationing, or limiting the number of boxes a customer can buy, they do not have a supply and/or demand relationship; they have a purchase limitation relationship. Economically speaking the price gouging is the most efficient way to implement the supply and demand policy.

An example for this would be the 22LRS being sold online at Cabelas. Yesterday was no inventory, however, today they received Winchesters 22LRS and sold them for $6.99 a sleeve of 100. They limited each customer one sleeve per day. In the end, they sold out in about 2 hours. Had they raise their price to $100.00 of a sleeve of 100 and not had a limit of one per day, then many of the people who bought them for $6.99 would not have bought them for $100.00 a sleeve. Their customers would have refused to pay them. Their inventory would have remand and not sold out in two hours, Cabelas would have reduced their price, which would result in removing the inventory off of their shelfs.

The second article talks about how Texas is pushing for a bill that will establish a tax holiday for guns, ammunition and hunting related supplies on March 2; Texas Independence Day. Most believe this will never pass, but the theory behind it, is to supply additional support for hunters and outdoorsmen while also celebrating it on the day marking Texas’ Independence. Those that do not believe this will ever pass are more focused on the lost revenue on the state then they are celebrating the true Texas independence. Other states such as South Carolina have passed legislation similar to this and discontinued the program due to the significant lost of state revenue.

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Texas, on the other hand, is currently beneficiating from a $9 billion surplus, but next years budget is showing a $27 billion deficit. With the significant state budget deficit, it will be extremely difficult to pass other sales tax holiday that could take hundreds of thousands of dollars off the sate revenue. In reality, this legislation is probably more publicity then seriousness. The other sales tax holiday within the state of Texas is for school supplies. That was passed to benefit the lower income families to make it more affordable for them to buy school supplies for their children. In this legislation is simple to benefit gun owners and outdoorsmen. In times like these, the owners and produces have to look at the supply and demand to figure out their next move to keep the supply and demand at equilibrium.

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