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Over a recent period of time, Taiwan is facing a crisis of toilet paper shortage. From cities such as Taipei to Tainan, stores are having difficulties with providing such a basic necessity to the general public. This disaster is causing tons of citizens to stock up on these goods since toilet papers are an essential hygiene product that they need daily. This is leading to issues around the country as it is raising the fear that toilet paper will soon be diminished.
To look at it from the supply side of things, producers of toilet paper gave a heads-up to retailers that prices would rise that upcoming Friday from 10 percent to 30 percent in the upcoming month of March. This is due to the price increase of pulp, the material used to produce toilet paper. Forest fires in Canada and issues of manufacturing in Brazil are resulting in the supply curve of pulp decreasing. In Figure one, it is shown that the conflicts due to weather are causing the supply curve of pulp to shift leftward. The change in supply is causing the equilibrium price of pulp to significantly increase while the quantity is decreasing.
Firms want to ultimately make a profit when producing a product. For this to occur, the cost of input has to be primarily lower. However, when the price of inputs rises, the profits derived from the product will be lower, resulting in the supply being lower. The price of pulp is an input cost of toilet paper. To make a profit, firms will want to use pulp at the lowest cost for their production. The price increase of pulp, however, is not allowing for that situation. Figure two, it is shown that the supply curve of toilet paper is shifting leftward due to the price increase of pulp. This leftward shift is causing the equilibrium price of toilet paper to increase and the equilibrium quantity to increase. This demonstrates the situation that the price of toilet paper is increasing for consumers while the amount available to them is significantly lower.
It was reported that in PX Mart, a supermarket chain in Taiwan, toilet paper has been almost sold out. All of the big packages were already sold out, making consumers resort to buying small packaged toilet paper packs. The same was reported for a seven-eleven that was just around the corner. An employee of the store stated that toilet paper was disappearing off the shelves as soon as they were replenished. The stores were bombarded with customers for the sole purpose of stocking up the toilet paper.
The demand for toilet paper is shown to increase among the stores in Taiwan. Demand increases for several factors including the fear that prices will increase and the fear that there will be a shortage. This is the status quo in Taiwan. Citizens are fearing that there will not be enough toilet paper for them and that the prices of what is left on the shelves will significantly increase. In figure three, it is shown that the demand for toilet paper is increasing due to the fear of not being able to afford or stock them in the future. This is causing many citizens to rush to the store in order to stock up on the necessity.
The virtual world is contributing to the increase in demand as well. A dedicated web page of the online retailer PChome, an e-commerce service group, asked at the top of their web page The cost of toilet paper will go up soon, have you prepared? The website was offering big packaged deals on the normal good by local and foreign brands right under a threatening advertisement that was supposed to alert the buyers to buy toilet paper as soon as possible. Such advertisement is implementing the fear of toilet paper even further, resulting in an increase in demand for toilet paper.
Additionally, the shortage of pulp-based toilet paper has caused buyers to consider an alternative good, which is recycled toilet paper. Compared to neighboring countries like Japan with 65% and more than half in the US and Europe, only 5 percent of toilet paper and tissues come from recycled material in Taiwan. Since the price of toilet paper made with pulp is increasing and the quantity of it is decreasing, people have chosen to shift their preference to a different type of toilet paper. Although the demand for toilet paper produced from pulp has increased, it is also shown that many consumers are indeed shifting their preference resulting in the status quo.
In summary, fear is what is in these peoples eyes. Production issues of input are causing this fear. They are scared of not being able to use the one thing that they need. This fear is forcing them to rush out of stores and buy packs of toilet paper. This goes on to show how one problem regarding an input is causing tons of citizens to dive into a pool of chaos.
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