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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00:00 Do gun buyback programs really work?
00:45 National gun market
01:10 Local gun market - perfectly elastic supply curve
01:52 Increase in demand - New buyers (police officers)
03:39 If price doesn't increase, nothing really changes
04:22 When it can work - Australia pairing buybacks with law changes