Jan

20

Price gouging

January 20, 2025 |

price gouging - This week’s news affirms earlier reports from all of human history that price controls discourage producers, reduce supply and impose shortages that cause consumer suffering (wsj).

In Praise of Price Gouging
When demand far outstrips supply, unfettered prices are just what we need.

We should praise price gouging, not ban it. Yes, we should pass a new federal price gouging law—one that nullifies the many state laws prohibiting it.

The Problem with Price Gouging Laws
Is optimal pricing during an emergency unethical?

Many people feel price gouging is morally wrong. The remarks of newspaper columnists and state legislators provide ready evidence on this topic. Survey research by Daniel Kahneman, Jack Knetsch, and Richard Thaler, published in the American Economic Review, further establishes this point: most respondents found price increases during difficult times to be unfair, except in cases in which retailers were only passing along cost increases.

More recent research suggests that these unfairness judgments are driven primarily by emotional responses to the price increases. Careful examination of the ethics of price gouging raises questions for these emotion-driven judgments. The ethical case for limiting price gouging is weaker than it may appear.

The Speculator As Hero

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