Okay, now I can see the application of this argument. You can think of the punishment as a tax, the cost of which gets tacked on to the price of the good so that the seller ultimately gets the same amount of benefit whether they sell it at X price with no punishment or at X+Y price with punishment. (As I understand it, something much like this trade-off happens in drug trafficking.) But when there's no punishment and you're just unable to sell?
The analysis seems to hold if you consider the tax infinitely large (or just arbitrarily large such that it's never the best option).
Available in PDF here, the short story in question may appeal to LW readers for its approach of viewing more things than are customary in handy economic terms, and is a fine piece of fiction to boot. The moneychanger protagonist gets out of several sticky situations by making desperate efforts, deploying the concepts of markets, revealed preferences, and wealth generation as he goes.