Why I Support Price Gouging

During an event of extreme catastrophe, you would see the demand for necessary items increase and in a good economy, you would see the price for these items increase as well. In the event of extreme weather such as a hurricane, these items can include water, batteries, gas, construction material and other items depending on the type of event and geographical region. I have learned that free market prices tend to rise in events of chaos and this will drive a shortage. Using gas as an example: “The price spike reflects the market process at work: the increase in demand and decrease in supply lead to a higher price. That higher price reflects the greater relative scarcity of gas” (122). This increase would act as a signal to help declare cooperation in the economy. What many fail to understand is that changing money prices provide appropriate incentives. The Supplier and the demander always find ways to accommodate each other, even in extreme crisis. Sure, most people don’t prefer to pay $50 for a gallon of gas during a price gouge, but that doesn’t mean that they wouldn’t in an emergency situation. This drastically higher price per gallon allows for the continued tendency toward plan coordination. For example: one of the greatest incentive to increase the price of gas would be that with the higher price you could get the emergency products to the storm torn region much faster. The suppliers would be quicker to send a large supply of gas to NY over the other regular prices distribution chains.

Think of it this way, it will cost much more to get the gas to the dangerous areas. If roads are damaged, areas are flooded or filled with debris, it will take more time, efforts, equipment and work to get the supplies there and all these things cost money. It is better to pay it during a price gouge than to scrap for the funds and delay the distribution chain all together. In a good economy, the demand will increase and so will the price.

Ironically enough, the problematic view is gouging is the real problem in these situations. Anti-gouging law actually prohibits the economy from functionally properly in the event of a crisis. Since the law prevents suppliers from raising prices, the people of New York probably tried to identify alternatives to create an advantage or remedy instead. An example of this would be for gasoline outlets to reduce costs by reducing hours of operations so the non-monetary cost to customers world rise (their time), which would create more chaos. These price ceilings tend to generate an unintended shortage that isn’t necessary and can be very harmful. The shortage would be caused by an price of gas and average amount of gas flowing into the region as a huge wave of demand pours though. There would be no way to meet the demand which is what happened in New York.

If gas hits $50 per gallon after the storm, people would be outraged, however; they would have paid the price regardless. With this increase price, gas would have arrived at a much quicker pace and people would have worked their way through the $50 price until the price decreased. By that I mean, there would be so much gas available that the price would decrease again and things would be back to normal but a huge amount of gas would be available for the public driving the price back down. Some may think “what about the people who can’t afford the $50 price per gallon?” What would happen to them? In the regular market economy, those same people rely on other people who are spending money to control the prices in the market. So in reality, nothing changes. They must wait for people to spend their money for the $50 gallon price until the prices goes back down. Are there moral issues that come along with price-gouging? There sure are. Some people may be left to die or to forced to wait for help to arrive, but the higher price for gas is their solution to quicker emergency aid. Just like the regular gas price, the $50 price would have it’s benefits, as the pricing system works just as effectively during the chaotic conditions as it does during regular, day-to-day life.