Price Gouging Post Sandy
Undoubtedly over the coming days and weeks we will hear stories of price gouging in the areas affected by Sandy.
Price gouging is simply when an unscrupulous rich businessperson, such as a gas station owner, decides to double the price of gasoline to to take advantage of poor citizens during a time of crisis. He then laughs maniacally all the way to the bank.
That is why New York has laws on the books that specifically disallow this:
2. During any abnormal disruption of the market for consumer goods and services vital and necessary for the health, safety and welfare of consumers, no party within the chain of distribution of such consumer goods or services or both shall sell or offer to sell any such goods or services or both for an amount which represents an unconscionably excessive price.
I hope New York takes full advantage of this law to prosecute violators to the fullest.
When demand for goods, such as gasoline, rise in a crisis, the state correctly does not allow price gougers to take advantage by letting prices rise to meet the demand. This results in shortages of those goods as the suppliers run out.
Higher prices would incentivize gasoline suppliers to send even MORE gasoline to that area to take advantage of the higher prices. They would then sell even MORE gasoline to poor citizens, gouging them further!
Well that is just terrible, so you can understand why these laws exist.
Sure people might have a chance to get gasoline and therefore be able to drive out of the area to escape a crisis situation, or drive to the hospital, or drive around town to check on neighbors that might be in need, etc.
But at what cost?
Would you rather pay double the normal price for gasoline and other goods just to go to the hospital or help your neighbors? Or would you rather go without and be stuck in place during a crisis?
The answer is clear: shortages are much better than price gouging.
That is why the wise government makes these laws.