America is gearing up for its first total solar eclipse in
well over a quarter century, and there’s something strange going on near the path of totality.
No, I’m not talking about the possibility of Lizard Man sightings during the
eclipse, but rather the fact that there appears to be a shortage of the cheap
disposable solar eclipse viewing glasses that are essential to wear if you want
to look at the sun without permanently damaging your eyes. This article, from Denver, describes the difficulty that people from Oregon to
South Carolina are experiencing in finding the glasses in the waning hours
before Monday’s eclipse. I’ve discussed shortages before on this blog, so why is this one so strange/unexpected?
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| A total eclipse over the United States is a once-in-a-generation phenomenon (Photo credit: NASA via Wikimedia Commons) |
The shortage of solar eclipse glasses is interesting because
it should qualify as a relatively competitive market (many buyers and sellers;
free entry/exit; etc…), and the product is relatively inexpensive and quick to
manufacture and distribute. In addition, science allows us to predict future
eclipses far into the foreseeable future, so it’s not like this event suddenly
snuck up on everyone. Thus, despite there being no specific laws placing a
price ceiling on solar eclipse viewing glasses (some states’ general price
gouging laws could potentially apply, but I’m not aware of any being applied at
this time), a shortage of eclipse viewing glasses has emerged. So, you may be
asking yourself, what kind of factors would contribute to such an economic anomaly?
When a competitive market experiences a shortage, it usually
adjusts for the disequilibrium created (quantity demanded > quantity supplied)
by increasing prices until the market reaches equilibrium. This occurs because,
as prices rise, more suppliers are willing to produce more eclipse glasses, and
at the same time some consumers stop demanding pairs of glasses because the
price gets too high for them. We expect this to take a bit of time to occur,
but even if there were no additional time to produce more pairs of glasses the
price of glasses should increase a lot until enough consumers drop out and
there is no longer a shortage.
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The path of "totality" stretches from coast to coast!
(Photo credit: Wikimedia Commons)
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There are two interesting things that appear to be occurring
with eclipse glasses. First, it appears that both producers and consumers may
have underestimated the Demand for these glasses. This is likely do in large
part to the rarity of total solar eclipses in the United States. It’s hard to
predict the level of Demand without much historical data, especially due to the
lack of eclipses that could be hyped up by so many internet and 24/7 news
stories. When stores that don’t typically sell eclipse glasses (hardware
stores, gas stations, etc…) were deciding how many pairs of glasses to order to
stock their shelves, they seem to have preferred erring on the side of
underestimating Demand. This makes sense; while eclipse glasses are relatively
cheap to produce and store, their value drops to almost nothing after the
eclipse on 08/21/2017. The next total solar eclipse in the US is not until 2024, and
only overlaps with this year’s path around southern Illinois/southeast
Missouri. That leaves a lot of stores across the nation that would have to store
any excess glasses with very few potential buyers after Monday.
The second complication, that may be the most interesting to
an economist, is that many groups began advertising several weeks before the
event that they would be handing out eclipse glasses for free. Some were
schools, museums, and other government institutions who may have been seeking
to promote the “public good” by helping protect people’s eyes while encouraging
people to pay attention to this scientific phenomenon. Others were retail
establishments, including many optometrists, who used the free glasses as a
form of advertising and a way to get potential customers in their doors. No
matter their reasons, these free glasses seemed to have two effects. First,
many suppliers knew they’d be trying to sell glasses against others who were
giving them away for free, and so they logically ordered fewer than they
otherwise would have. Second, many consumers (like me) heard that there were
free glasses available, and chose to pass by those that were for sale in the
store a few weeks before the eclipse.
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Were you able to snag a pair of these stylish and necessary frames?
(Photo credit: nps.gov)
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By the time everyone realized that Demand was much higher
than expected, it appears to have been too late. No longer being able to find
free glasses around town, consumers turned to the stores selling the glasses.
Prices appear to have been a bit “sticky”, with the high Demand not being fully
revealed to the stores selling the glasses until they had almost sold out. If
they had raised their prices immediately only to find that Demand was low,
consumers would have only bought from their competitors, and they would have
been left with a large excess of glasses with no buyers.
One additional complication in this ordeal was the emergence
of “fake” solar glasses sold on Amazon and elsewhere. Many people purchased
glasses for themselves and their families only to be told that they may not be
fully protected from the solar rays after all, and that they would need to find
the “approved” version of the glasses. Whole counties
even ordered and distributed these unapproved glasses! As any given person only
needs one pair of approved glasses to view the eclipse, many people who would
have otherwise been satisfied and not purchased more glasses at any (positive)
price were now thrust back into the market to try to buy a pair of glasses in
time.
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