Truck and Barter

Many police officers in my area find that their self-interest requires them to be packing all the time. Here's the rather stark incentive:

"I run into people I put in prison at the oddest places," said Bunney, who likes buying his weapons and accessories at Potomac Arms Corp. in Old Town, where he worked after graduating from high school. "You run into them when you're shopping at a mall, when you go to the beach, when you go to dinner. I always want to have that edge if they decide to get even."

But they don't need the big guns off duty, and they opt for smaller models. This requires their own ammunition, holster, and other accessories. Apparently, this is where a gunshop finds its most consistent source of profit:

Jim Rowe, manager of Shooters Paradise, estimated that the store sold about 1,300 guns in 2003, not enough to cover the rent at the strip mall the store is in on Route 1. The real money, he said, is in the accessories.

Why are new, legal guns not so profitable? Well, one might think that since the US stock of (presumably working) firearms is 200-250 million, that the market is "flooded". But that's not so. Instead, this article suggests that manufacturing pricing policies yield a narrow retail price range for new guns, and the absence of such policies on used guns leads to a diversified pattern: some dealers use a fixed subjective markup over their purchase price, others price dynamically, by reacting to perceived demand conditions. The article addresses the problem of pricing (for maximum profit) a single firearm when originally purchased in a bulk lot; more importantly, the author reminds gun shop owners that inventory is costly:

Sooner or later you invariably will pay too much for a gun. For myself it usually occurs when I have been sloppy in my inspection of the piece and overlooked a detractor like a bent or bulged barrel, a stock crack, or such. It is also possible to misidentify a gun, overlook the fact that a barrel has been shortened, or just plain over estimate what it is actually worth. As Karl Malden would say: "What do you do? What do you do?"

Some dealers will simply refuse to sell a gun at a loss. It is a point of pride with them and they will literally let a gun sit in the rack for years rather than to take a loss. When the gun finally does sell, they think to themselves that they at least broke even. Well, they are wrong. Actually they lost far more money than if they had just bitten the bullet and sold the gun for a loss in the first place.