Are PS5 scalpers actually bad?

If you buy from a retailer, you are paying in time as well as money. This is a good deal for people who have relatively more time than money. If you buy from a scalper, you are substituting money for the time component, which is good for people who value their time more highly.

Therefore scalpers are shifting supply from people who have more time to people who have more money. This is likely moving supply from middle class people to rich(er) people.

If you're in the set of people with more time than money, which is most people, I can see being upset. It arguably substantially increases time to PS5 because you weren't previously competing with someone like me who doesn't have time to spare to track inventory and call around, but has plenty of money. It's removing consumers from a pool that they weren't in yet.

PS5 scalpers redistribute consoles away from those willing to burn time to those willing to spend money. Normally this would be a positive — time burned is just lost, whereas the money is just transferred from Sony to the scalpers who wrote the quickest bot. However, you can argue that gaming consoles in particular are more valuable to people with a lot of spare time to burn than to people with day jobs and money!

Disclosure: I'm pretty libertarian and have a full-time job but because there weren't any good exclusives in the early months I decided to ignore the scalpers. I followed https://twitter.com/PS5StockAlerts and got my console at base price in April just in time for Returnal. Returnal is excellent and worth getting the PS5 for even if costs you a couple of hours or an extra $100.

Most of the answer here seems to be "no": PS5s are an underpriced good and "scalpers" are simply taking advantage of an inefficiency in the market to correct the mismatch between supply and demand. You could argue that Sony and retailers are fools for not simply charging more for them, but...

Maybe Sony is taking a page from Nintendo's playbook. Nintendo historically seems to intentionally underproduce consoles to meet demand. Although not confirmed as best I know, given it's happened repeatedly, they have access to good market research that should let them accurately predict demand, and because this has happened repeatedly they've had the opportunity to address supply chain issues that would cause it. Thus, it seems to be a strategy that they believe induces additional demand for their consoles.

For example, Nintendo releases a new console, in the US generally tied to the Christmas buying season. Supplies run short, people compete to get them, the news reports on how excited people are to get the latest Nintendo console but no one can find one. People hear about this and get excited, because a sure sign that something is valuable is that other people want it. Thus demand for the console is marginally increased over what it would be if they had produced an adequate supply to begin with or priced it higher to match demand.

I'm not aware of evidence that Sony has chosen to do this intentionally, but it's possible they're enjoying a situation where demand is so high that there's arbitrage to be done and they're actually reaping intangible benefits that are already priced in.

One cost of having prices raised by scalpers rather than retailers is that it's easier for scammers to impersonate scalpers than large retailers, so this raises the rate of scams. I don't really care what price PS5s sell for, but increasing the rate of theft-by-scam seems really bad.

It seems as if the following might be true. (I have no idea whether it is, but the key point is one you mentioned in the OP.) If it is, then the scalpers are hurting ordinary people's ability to acquire PS5s at non-scalper prices, even if they are prepared to spend a lot of time.

• Every time some consoles become available, they will go to the people who get there first.
• Ordinary people don't have very effective ways of getting there first.
• Scalpers, because they are buying many PS5s per drop, can afford to take measures that let them almost always get there first. (Any specific scalper won't necessarily win in a particular case, but the person who wins will almost always be a scalper.)
• Therefore, as long as there are scalpers around doing their thing, ordinary people don't have the option of trading time against money and getting PS5s in stock drops, because all the PS5s in those drops actually go to scalpers. Or, at least, almost all, so that the time-cost of trying to get a PS5 that way is much larger than you would expect.

Probably some ordinary people could implement the same sorts of bot that the scalpers use, but (1) most people don't have the necessary skills and (2) even for those who do, that again is a large investment of time given that all they want is one PS5.

 Some points that I have not seen mentioned before:  

a)

that this is just the kind of thing that happens when retailers are foolishly prevented (by public opinion, if not by law) from charging the true market price.

Yes, this is the natural course of events, just like it is natural that people will steal from me if I leave the door to my house open at all times. This however does not mean that the thieves are not morally to blame. (I understand this was not your actual point, but it is a common point in libertarian discussions). Both the manufacturer and the retailers consider the scalpers' intention and tactics to be unwelcome. (Per the linked article, the scalpers have to write human impersonating bots to fool the retailers' websites; they are not using public facing APIs). In that sense, scalpers are not playing by the rules and it is reasonable for people to be angry at scalpers, even though it may not agree with an utilitarian outlook on ethics.

b) Others have argued that through scalping people's time vs people's money is traded. That is correct, but it seems to me that you are also trading luck for money. Obviously, getting a PS5 in a store drop is governed by chance as well as time. I am not entirely sure how that changes the net welfare calculus: 

1. On the one hand, through scalping the good goes to the consumer who is willing to spend the most in one resource (money), which is strongly correlated to how much they desire the PS5 (which is good for net welfare). Luck is not correlated to how much a consumer wants the good. 
2. On the other hand, if you award goods by lotteries, people do not have to waste resources that do not actually incentivize  the production of PS5s. 

c) In the particular case of a PS5, it is preferable that the good goes to people with more time, rather than with more money, because the former will have more time to actually use the PS5, thus deriving more benefit from it. If everybody were perfectly rational, the rich bidders should have already priced that into their price, but I doubt that people are that rational in this circumstance without being able to really prove it. 

PS5 scalpers are good for net welfare and selling PS5s below market rate is bad, but if you are unwilling to pay the premium then (1) you are worse off because your cost in time to find one goes up and finding one is like winning a lottery, or means you can bid with time instead of money which you clearly prefer, and (2) you were unwilling to pay the market price so you shouldn't have one yet.

Couldn't producers just hold an auction and have the proceeds beyond the price they're allowed by public opinion to charge go to charity?

You'll have to define "bad" in order to come to any conclusion on this.  It kind of sucks that the equilibrium is for the manufacturer to charge less than people are willing to pay, leading to waste in the form of reseller profit, time sunk in queueing/searching, or other non-productive costs.  I'd rather the manufacturer get that surplus, and use it to make more stuff for us (possibly far in the future), or at least to be rewarded for making something people want so much.

They can't do this, because too many people hate the idea of profit and don't understand that value is personal, marginal, and variable over time.  So they think there is "the price" that manufacturers can charge, and they direct their anger at scalpers.  If manufacturers charged more variable demand-based prices, that hatred would flow to them, and likely hurt them in the long term.  

It's that consumer misunderstanding and hatred which is the problem - the scalpers are just a mechanism to find the price where supply meets demand, and they're willing to take the anger for that.

I don't think saying "public opinion" is a good model for why the PS5 costs what it costs. I would expect that retailers are forbidden to charge more by contracts that they have signed with Sony. 

As far as Sony being limited by "public opinion" I have a heard time imagining a situation where Sony sets the prices to 1.5X of what they are currently resulting in a big customer backslash against Sony. 

One model of why Sony is acting the way it does is because Sony wants to give game developers the impression that Sony is committed to selling a lot of PS5 and if Sony would price the PS5 higher that commitment wouldn't be appearent. 

A stupid question: even if there are pressures that keep producers from selling at the true market price, why don't they produce enough to meet demand at the lower price they do sell at? A deliberate strategy to build hype by making consoles scarce? Something else?

Arguably the only value they provide to society is finding the actual equilibrium price of a PS5.  Is that important enough to be "good"?

Sure, they provide value to their customers.  But every PS5 that is bought for scalping makes it harder to find a PS5 at the store. They're effectively spending other people's time to save their customers' time. Qualitatively, that sounds like a transfer of value from one group to another -- not a benefit to society overall.  

In the end, the same number of people will own a console and get to use it.  Unless one person's leisure is worth more to society than another's, no value (to society) will be created by manipulating this distribution of resources.  The one who will really benefit are the scalpers themselves.  Sure, it might not be textbook rent-seeking, but it's pretty close.

(I do admit this argument might "prove too much", and could be turned around to any store selling any good...)

The argument that every PS5 scalped means PS5 consumed and thus lessened competetion can also be run backwards. For every PS5 bought with mark-up on ebay there was a scalper competing for drops before the consumer had made an aquisition decision. With scaplers you are competing against the future and without them you would only be competeting with the present. This seems like a deal type opposite that of a "future". And the relevance of it is because the "the present" ie synchronous decision to consume and to buy is not available.

that this is just the kind of thing that happens when retailers are foolishly prevented (by public opinion, if not by law) from charging the true market price.

Retailer console base prices are set by the manufacturer. A first-party retailer is not allowed to charge more than the RRP as part of their agreement.

Perhaps an important economic point here is that consoles are generally sold below-cost. Console manufacturers lose money on every product they sell from hardware costs. This is because consoles make their money on games, where the margins are much fatter.

The issue here is that the manufacturers and retailers are working in a commodity mindset, whereas the market for these items has shifted away from a commodity and into a luxury due to the high demand compared to supply.

In general though, I'm optimistic about scalpers collapsing under increasing liqudity. Sony poured a lot of resources into automating their manufacturing pipeline and has been churning them out as fast as they can since day 1, with no sign of slowing. The number of consoles in the world is increasing at a much faster rate than the number of people who want consoles.