Will the Court's decision increase firearm sales? Think again...
Yesterday, the Supreme Court ruled that the constitutional right to bear arms overrides state and local laws. While the decision may strengthen Americans’ rights to carry firearms, it probably won’t result in an increase in firearms sales. In fact, I’d argue just the opposite.
In a Wall Street Journal article published today, author John Jannarone makes this same point that gun sales could actually decline because of yesterday’s Supreme Count ruling. Does Jannarone’s theory seem counterintuitive? Not really and here’s why...it all has to due with the power of scarcity.
We’ve already seen the power of scarcity influencing the firearms market for the past 18 months or so. Gun sales surged in late 2008 and all of 2009 due in large part to the fear that the Obama Administration would clamp down on firearms. When people perceive that items are (or will be) scarce, a greater value is placed on that item which clearly influences behavior. The Supreme Court ruling affirming an individual’s right to carry firearms should have the immediate effect of reducing the perception of scarcity that has existed since late 2008. And that should translate into reduced demand and weaker sales.
Here’s the takeaway: In an earlier post, we examined the paradoxical reason why Oldsmobile exceeded all U.S. sales projections in 2003 - General Motors, its manufacturer decided it was going to discontinue the line due to poor sales. In this case, yesterday’s Supreme Court decision - which will probably make it easier for American’s to purchase firearms going forward - will have the opposite effect in reducing sales because of the power of scarcity.