Archive for August 30, 2011
An evergreen story around the time of hurricane season is price gouging, sometimes referred to as profiteering. In most economic circles, though, profiteering is a superset of price gouging, including such other practices as price fixing or collusion.
The key element of price gouging is the sudden increase in price of an essential good or service due to an expected or actual civil emergency. The practice itself is illegal in some states, notably Florida, a state with a long history of frequent and severe hurricanes.
Clearly there are social concerns regarding gouging, and many people feel that it’s unethical from a purely social perspective. But that’s not what I’m talking about today. Today, I’d like to ask if the price increases are so bad from an economic point of view? Let’s examine this further to see. (more…)