The Stanleys at target used to always be sold out, but after they put a household limit on them the shelves are always stocked. I feel like this would be the same situation for cases of water. I don't think that is would be truly beneficial for a store to raise water prices to 40 dollars. I understand that water is a necessity and a Stanley is not, but why would limiting the cases of water someone can buy not work to spread out who actually gets water?
Great example! For what it is worth, I could concede that stores limiting consumers in quantity is one way to cover a small part of the hoarding problem among consumers. For the Stanleys, stores limiting purchase quantity could stop people from purchasing multiple, maybe even more than they need. There does arise a problem that the quantity being set is arbitrary. Who decides how many Stanleys someone needs? I am sure husbands and wives have very different opinions on that matter, but my point is that prices (as we will demonstrate in the chapters on supply and demand) are not just the price we pay, but information signals to buyers and sellers. Higher relative prices are not just something we pay, but information that tells consumers that the resource/good/service they want to buy is more scarce. Due to Stanley's marketing campaign through influencers being more successful than they could have dreamed, way more consumers wanted the product than they expected. When there aren't enough Stanley's at their price of $45 as consumers would like to purchase, how do we solve that problem?
Economist say rise prices. Why? The first of a few reason is that it solves the same problem limiting quantity does - some consumers will not be willing to pay a higher price, say $60, so those who value the Stanley most will be the ones to get it. The second reason is that it encourages consumers to find alternatives. Maybe they continue using the cup pushed by influencers from the previous year until they can keep up with the times and buy a Stanley when they come down in price. The quantity limitations set by stores may make the Stanleys last on the shelves longer, but are the people who want the Stanleys the most getting them? Say a Stanley fanatic showed up too late and didn't get a cup when someone else earlier in the day bought one, but wasn't crazy about the cup - is that more fair? The only reason they got the cup was because they showed up earlier, not because they were more deserving or needed it more. My point is that rationing without prices has problems, is arbitrary, and loses out on the incentives that rationing with prices has.
When we look at something that is quite dire, like cases of water after a hurricane, it is much more important that prices are used. When we look at the incentives I listed at the top of the paragraph above, those that need the water most will still be willing to pay for it. Maybe some have water bottles, or know family and friends that have some and see the price and move on - leaving the water available for those (including charities who will later give the water out) that don't have that. There is also the effect of expectations as we will talk about later in class. If individuals expect a hurricane to come and increase the prices of particular goods, many will undertake the effort of preparing for those events so they can buy when prices are lower. In the paragraph above, we never touched on the incentive of suppliers as well. If suppliers see that they can sell items at a higher price, they can afford to undertake the costlier methods of producing more marginal units of water bottles (or Stanleys) that they were previously unable to do.
Imagine a natural disaster hits an area where you have loved ones, and they have no one else around them to get water from. What would you prefer? Prices staying low and you have to pray they get to the water before someone else (even assuming quantities are set for each household), or prices going up and you can charitably give them money to buy water?