> What the "gouger" is doing is correcting a market inefficiency by performing arbitrage through time. In order to turn any sort of profit, they must have more accurate information than the rest of the market.

No, that's only true if you believe the simplistic myth that a price-driven market is always the best and fairest way to allocate scarce resources, in all circumstances. That myth is false, but it's a seductive myth because the market works very well in many situations.

Price gougers operate only in crises, inserting themselves as middlemen to extract a profit on emergency essentials. They can't do anything to increase supply, because there's no time for that. They don't direct resources to where they're most needed, rather they direct them wherever the most profit is. They perform no social good, and are actually a form of market failure.

> It might also spike demand earlier than it would have spiked, which sends a signal to ramp up production.

That's a fairy tale. The manufacturers aren't solely reliant on price to learn about demand, and they have clearer and more direct ways to communicate with their customers in situations like this. Do you think Purell and 3M needed guys like this [1] to tell them demand for their products was spiking due to an incipient pandemic? No. 3M was literally ramping up in late January [2], before the COVID-19 was even a blip on the price-gouger's radar.

> 1 person snapping up 10,000 masks with intent to sell is better than 100 people snapping up 100 masks each that they intend to stick in their closet "just in case", while people that really need them find empty shelves.

Firstly, there are better ways to manage the surge demand, which the actual businesses involved are implementing: prioritizing sales to customers based on need and implementing retail purchase quotas to prevent people (usually gougers) from buying everything up and creating artificial scarcity.

Secondly, it's likely that the 100 people in your example who bought from the gouger just put the masks in their closest anyway. Gougers take supply out of the normal channels and inflate prices so much that the people who bought from them are worried people with more money than sense, rather than those with real need like nurses and hospitals.

Thirdly, at the maximally inflated prices gougers often sell for, they may end up functionally becoming hoarders themselves and still make a profit. If a gouger buys 1000 masks at $1/per, sells 100 at $10/per, 200 at $5/per, 300 at $2.50/per, and unloads the rest at the original $1/per after it's all over, he's more than doubled his money while wasting half his inventory. He's not looking to speed resources to where they're needed, but milk every cent out of them that he can. The supplies do no more good in a profiteer's garage than in a prepper's closet.

[1] He Has 17,700 Bottles of Hand Sanitizer and Nowhere to Sell Them (https://www.nytimes.com/2020/03/14/technology/coronavirus-pu...)

[2] How 3M Plans to Make More Than a Billion Masks By End of Year (https://www.bloomberg.com/news/features/2020-03-25/3m-double...): "Andrew Rehder, manager of 3M Co.’s respirator mask factory in Aberdeen, S.D., got the call from headquarters on Tuesday, Jan. 21....Rehder told them that a new virus was spreading rapidly in China and that 3M was expecting demand for protective gear to jump....Now, Rehder told his charges, Aberdeen would shift to “surge capacity.” Idle machinery installed for precisely this purpose would be activated, and many of the plant’s 650 employees would immediately start working overtime."