Elasticity of Supply: Do Gun Buybacks Work?

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- [Alex] 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:

$200 for a handgun,

$100 for a shotgun,

and $25 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 400 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 400 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 25 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 3D printed guns

for $3 each

and turned them in at a buyback

where the city
paid him $50 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.

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 going to 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.

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