Monday, September 15, 2008

Fill-in-the-blank article about price-gouging laws

by Art Carden

[As surely as summer follows spring, natural disasters are followed by saber rattling about "price gouging," which is usually defined very lucidly and clearly as an "unconscionable" increase in the price of a necessity. These tend to follow a formula, so I thought that instead of writing a new article discussing the unintended consequences of every price-gouging law that goes into effect after a natural disaster, it would be useful to write a universal, fill-in-the-blank article discussing the economics of price-gouging laws. Whenever there is a natural disaster, you can just fill in the relevant blanks for a complete analysis of the economics of the situation.]

Fearing increases in the prices of basic items as a result of (disaster) , officials in (state or municipality) have declared a state of emergency whereby restrictions on "price gouging" are now in effect. According to (politician or law enforcement official) , the law is designed to protect innocent consumers from "unconscionable" increases in the prices of food, gasoline, ice, electric generators, and home-repair services. The unintended, unseen consequences, however, are predictable, unfortunate, and avoidable.

For more on this commentary, go to The Ludwig von Mises Institute

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