Elasticity of Supply: Do Gun Buybacks Work?

Local gun buybacks. They're popular
throughout the United States.

The city of Peekskill,
New York, for example.

They gave out gift cards to
anyone who handed in guns.

Two hundred dollars for a handgun,
a hundred dollars for a shotgun,

and twenty five dollars
for a non working gun.

Then the police, they had a photo op
displaying all of the guns that they got

off the streets. Now whether or not you
agree with the goals of these programs,

we can ask, do they really work?

A concept from economics,

the elasticity of supply,
can help us to get an answer.

By some estimates,

there are four hundred million
guns in the United States,

more guns than there are people.

And every year, millions of
new guns are manufactured,

and billions of guns,

both new and used, are bought and sold.

The market for guns is
a big national market.

Now think about the supply of guns to
a small city like Peekskill, New York.

The demand for guns in Peekskill is so
small relative to the total supply of guns

that Peekskill residents

can buy or sell as many guns as they
want at the market price. In other words,

the supply curve is perfectly elastic.

Now there's nothing surprising here.

The supply of all goods
produced in a larger market

to a small market is perfectly elastic.

Residents of Peekskill, they
can get all the gasoline,

all the bread, all the automobiles
that they want at the market price.

Now we can think about
a gun buyback program

as increasing the demand for
guns in Peekskill, New York.

New buyers, the police,

have entered the market.

Now here is the key point.

Will the increase in the
demand for guns in Peekskill,

will it increase the price
of guns in Peekskill?

No. The supply of guns in
Peekskill is perfectly elastic,

so the price of guns won't increase.

Instead, what will happen is that the
quantity of guns supplied will increase.

Just like everyone else in Peekskill,

the police can buy as many guns
as they want at the market price.

Remember, there are four hundred
million guns in the United States.

It won't be hard to find a few hundred
to sell to the police in Peekskill.

Yes, in the short run, there might be a
temporary decline of guns in Peekskill,

as a few people reach to the back of
the closet and find that old revolver

that no longer works,

and they think, Hey, this is an easy
way to get an extra twenty five bucks.

But if the price is high enough,

some people might even buy guns
to resell them to the police.

That's happened before.

In one extreme case, a Houston man three
d printed guns for three dollars each

and turned them in at a buyback where
the city paid him fifty dollars per gun.

It's like trying to reduce the level
of water in one end of a big pool.

It works temporarily,

but it's very temporary.

If the price of guns in
Peekskill doesn't rise,

then nothing fundamental has
changed in the market for guns.

Since the price hasn't changed, the
quantity demanded doesn't change.

In other words,

we don't move along the demand curve,

and nothing has shifted the
demand curve of gun buyers.

Buyers. They still have the same tastes
and the same reasons to buy guns as before,

so the demand for guns doesn't shift.

Simply put, the gun buyback program has
no effect on the behavior of gun buyers.

Now elsewhere in the
world, such as Australia,

gun buyback programs have been combined

with laws making owning guns illegal.

Now in these cases,

a buyback program can get guns
off the street because it combines

a buyback with an
inelastic supply of guns.

But a local buyback,

in a country where guns are still legal

and are being bought and
sold in the millions,

that isn't gonna reduce the
number of guns on the street.

And the fundamental reason is
because the supply of guns to a city

is perfectly elastic. Gun buybacks.

They're good for a photo
op, but not much else.

But you know what is
good? Practice questions.

You can test your understanding
of elasticity here.

We also have test banks and lesson
plans for economics teachers.

Or, if you're ready for
more microeconomics,

click for the next video.