The Case for Price Gouging
By Arnold Kling
C.C. Kraemer argues that laws against price gouging are a bad idea.
rather than harming the victims, the profit motive actually helps them because the result is an increase in supplies. That assures that everyone who needs the plywood will get it, an unlikely occurrence if prices are not allowed to rise. When the stores are empty because there were no price signals to protect supplies or to create an increase in them, what does a family desperately in need of a generator or propane lanterns think of the laws that they were told were intended to shield them from avaricious businesses?
I would add that laws against price gouging also reduce the incentives for businesses to maintain inventories of supplies in anticipation of possible storms.
UPDATE: Tyler Cowen has some opinions.
For Discussion. If you needed something after a disaster, which would anger you more–finding that a store had run out of something or finding that the store was charging five times the usual price for it?