Case Study: The Connecticut Shooting

From the recent case of the Connecticut shooting, this article explains how there is an increase of demand in the state of Dallas for high powered guns due to the Government speculated to impose a strict no gun law . The problem is the decrease in supply causing excess demand which then creates a shortage in the market. This problem can be visualised through the means of a negative externality graph.

Before the incident, the price point of guns lie at point Qe. The Graph shows the private benefit is still much higher in price and quantity than the social benefit. This is due to the fact that guns have more benefits on personal use such as personal safety as said from the article rather than benefiting to society which means the good is

The outward shift occurs due to fear for personal safety and inability to buy the guns for self protection, consumers will purchase guns while they can before the rumoured legislation is imposed. This is a shortage as the shift creates a disequilibrium seen from the extension from the normal equilibrium price to point B.

The distance between the MPB and MSB marks the deadweight loss (DWL) which in this case are spillover costs of guns. This is the possibility of crime, misusing the guns, accidents, and even murder. This graph is saying that the market for guns is thriving to change its equilibrium from QE to Q1 where private benefit equals social benefit as that point does not have an externality.

The graph shows that with the increase of demand, the gap between private benefit and social benefit widens. The increase of demand amplifies the market failure of guns making the good even more over-consumed widening the gap between social benefit and private benefit. We can see that the deadweight loss went from MSB to equilibrium, to MSB to point B. With the increase of consumption of the good, this will also increase the chances the spillover cost to occur therefore widening the negative

With this legislation, benefit of it is that there will sudden decrease in the spillover costs of guns as the law buffers the consumers from getting it. On the contrary, the impact is that it completely destroys the formal market as legal sales through government-sanctioned channels are banned. On the long run, What is expected to happen is the encouragement of black market to rise as people can only seek their demands for high powered guns outside the law. Furthermore this also impacts the economic well being of the firm owners and sellers as they are unable to earn income from selling their