There is an article at Quartz, The Economic Case for Price Gouging
Under normal conditions, price fixing can have really bad outcomes (price fixing is one piece of the puzzle of what has gone horribly wrong in Venezuela) but in times of emergency, it seems like it would be cruel to price gouge.
The argument made in this article is that price gouging would actually be a greater good because:
1. Less things would run out, for example, people would only buy the water or gas they need instead of filling the tank
2. Store owners would more likely stock up on things needed in an emergency and so would consumers
3. People would have more incentive to get things to disaster areas
To counter balance this, I would say that outlandish or cruel price gouging could also backfire on the owners. We've had two huge stories concerning price gouging in recent news: the epipen price gouging story and the Martin Shkreli (Pharma bro) story. Price gouging of pharmaceuticals where there is a monopoly or a near monopoly I would say is a time that some sort of price controls need to be in place.
Are our existing anti gouging laws during a disaster a good idea? Maybe there is a middle ground, allowing prices to increase but limiting to 100% increase or some other limit.
There are quite a few other articles floating about making similar arguments
http://ift.tt/2wpCBxK
http://ift.tt/2wpN3FI
http://ift.tt/2wpjh3Q
Under normal conditions, price fixing can have really bad outcomes (price fixing is one piece of the puzzle of what has gone horribly wrong in Venezuela) but in times of emergency, it seems like it would be cruel to price gouge.
The argument made in this article is that price gouging would actually be a greater good because:
1. Less things would run out, for example, people would only buy the water or gas they need instead of filling the tank
2. Store owners would more likely stock up on things needed in an emergency and so would consumers
3. People would have more incentive to get things to disaster areas
To counter balance this, I would say that outlandish or cruel price gouging could also backfire on the owners. We've had two huge stories concerning price gouging in recent news: the epipen price gouging story and the Martin Shkreli (Pharma bro) story. Price gouging of pharmaceuticals where there is a monopoly or a near monopoly I would say is a time that some sort of price controls need to be in place.
Are our existing anti gouging laws during a disaster a good idea? Maybe there is a middle ground, allowing prices to increase but limiting to 100% increase or some other limit.
Quote:
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Price controls “lead to misallocation of resources, long lines, and black markets,” said Jonathan Meer, an associate professor of economics at Texas A&M University. “These policies can cause serious distortions but governments use them quite a bit anyway. People don’t like high prices of course, and unfortunately price controls seem like easy solutions to difficult problems.” |
http://ift.tt/2wpCBxK
http://ift.tt/2wpN3FI
http://ift.tt/2wpjh3Q
via International Skeptics Forum http://ift.tt/2wKJ8G1
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