Elasticity of Supply: Do Gun Buybacks Work?
Course Outline
Elasticity of Supply: Do Gun Buybacks Work?
What happens when a new buyer enters a market with a perfectly elastic supply curve? A supply and demand graph tells the tale: the quantity sold increases, without impacting the equilibrium price.
Alex Tabarrok uses this elasticity model to explore the real-world effects of local gun buybacks in the US. They’re often presented as a means to reduce the number of firearms in a community–and thus, supporters argue, to reduce crime and accidents.
To an economist, these programs just temporarily add one new buyer (the police) for a good that’s available in practically unlimited quantities at the market price. They don’t change other buyers’ incentives and preferences. The perfectly elastic supply means that the only result is a few more sales at the market price.
Whether you think local gun buybacks are a good or bad policy, the economics of supply elasticity make it almost impossible for these programs to have an impact on firearm ownership.
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