Gun regulation and the firearm trade

Source:http://hamptonroadslawfirm.com

The economic principle I’m exploring is that institutions are the “rules of the game” that influences choices.

 My research question to help me study the economic principle is how does the regulation of firearms in the Federal and State governments affect firearm trade?

Investopedia, How does gun control policy affect stock price of firearm companies? By Brent Radcliffe. This article demonstrates the economic principle because it shows that states with harsher gun laws like open carry have fewer guns and the number of households with guns is decreasing while the total number of guns is increasing. 

 First, since gun policy is set by the federal and state governments, companies that manufacture firearms, ammunition, accessories, etc, will find it easier to sell their products in places with fewer regulations. These laws include “types of guns that can be purchased, limitations on who can purchase guns, limitations on where guns can be carried, and limitations on where guns can be purchased”. The higher regulation creates less demand for firearms. For example there are many gun laws in Illinois and fewer in Texas. This creates a lower demand for firearms in Illinois and a higher demand for firearms in Texas.

 Second, laws regarding legal carry also affect firearm trade. This is because the more someone is able to carry their firearm and make “use” of it the more they will want one. Gun owners may purchase more guns if they are allowed to take them more places. Open carry laws may reduce gun demand if owners aren’t allowed to carry and take them out of the home. Also restrictions placed on hunting licenses, as well as areas they can hunt in “can impact the sale of certain types of weapons, such as rifles and semi-automatic weapons”.

 Third, the amount of gun owners in the U.S. can affect the firearm market. “The number of U.S. households that own guns has steadily declined over the years: PEW, a nonpartisan think tank based in Washington D.C. estimated that 37% of households had a gun in 2013, down from 45% in 1993”. However, the amount of guns in a household has increased. This means gun owners are buying more than one firearm. This affects the market because firearm companies are now selling to a smaller market, but they are more likely to buy firearms.

 In my next blog post I will explore how the price of firearms change due to regulation.