A Defense Of Price Gougers

Oct 30 2012 @ 5:37pm

Governor Christie has promised to penalize price gougers. Mark Perry takes him to task:

Rising, market-based prices following a disaster are the most effective method possible of allocating scare resources, eliminating shortages, and attracting essential supplies to the areas that need them the most. In fact, market-based prices are also the most effective method possible of allocating scare resources, eliminating shortages, and attracting essential supplies to the areas that need them the most before a disaster – wind and rain don’t change that reality.

Governor Christie and others fail to recognize that the coordinating role of market prices becomes even more important following a disaster, not less important. To prevent the price system from operating following a disaster with price gouging laws will make the situation worse, not better. Thanks to the strict enforcement of their state’s price gouging laws, New Jerseyans should expect possible shortages of fuel, food and generators.

An earlier look at why price gouging often doesn't happen, even without government interference, here.