For the past few years ammunition has been in high demand. Whether this is due to gun control scares, presidential elections or conspiracy theories, people are buying more at higher prices than ever before. Ammunition supplies have been making a slow comeback. However, .22 and other high demand shells are still nowhere to be found. Relating to economics principles, we can obviously see there is higher demand than supply, driving the prices up.
There are some external motives for the increase in demand, but rationally you would expect demand to decrease as the prices soared. This is what confuses me, paying double or even triple the sticker price for a box seems undeniably ridiculous but people do it everyday. Wouldn't people have a price point where they would no longer buy the product? This may be a stretch but it reminds me of a Giffen good. A Giffen good can be described as a good that increases in demand as price increases, basically backwards of the traditional theory of demand. My thought is that people see prices increase for ammunition, they then go and buy up as much as possible before it is sold out. This occurs because there really isn't a whole lot of substitutes for ammunition. Nevertheless, a chain reaction occurs and has been for years now where some continue to buy ammo no matter the price, just to have it.
Inline with the characteristics of a Giffen good, I wonder if prices decreased substantially, people would buy less because it is seemingly more available. I recognize that this would most likely not occur but couldn't help but ponder the characteristics of an inferior good.
Do you think ammunition has characteristics of a Giffen good? What do you think is causing ammo to be in such high demand? How long will this last if it maintains Giffen good qualities?
Link that sparked my thoughts.