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The utility of 'price' (whether it involves "gouging" or not) is to signal the entire marketplace regarding the current state of supply vs. demand. The market
by gwright 14y ago
The utility of 'price' (whether it involves "gouging" or not) is to signal the entire marketplace regarding the current state of supply vs. demand. The market is dynamic and responds to the signal.
If you attempt to legislate the rules regarding price you are making it illegal to respond to the signal. This just leads to oversupply and legally enforced profit (the price is too high) or shortages and legislative enforced queues and delays (the price is too low).
- king_jester 14y ago> The market is dynamic and responds to the signal. W.r.t to price gouging, this is the thing that doesn't happen or doesn't happen quickly enough and means people who can't afford the new high price go without. For essentials like food, water, batteries in a no power situation, etc. that is a huge problem.
- gwright 14y agoHow 'quickly' is not quick enough for you? Companies like Walmart and Home Depot are getting pretty darn good at responding to disasters, especially for things like hurricanes where there is considerable lead time. Smaller events like tornados are much easier to respond to because they are localized. Price gouging laws negate any sort of systemic planning to take advantage of short-term price spikes. Eliminate the laws and you open up opportunities for creative businesses to plan and respond to these short-term opportunities.