Hooray for Price Gouging! It Makes Sure Everyone Gets A Little Something

As Hurricane Irene bears down on us, have you gone to CVS or Giant today and found that it’s all out of water? Alternatively, did you go last night and buy as much water as you could fit in your shopping cart?

Maybe you went to the hardware store and it was out of flashlights, or batteries. Or, maybe you went yesterday, and bought three flashlights — just in case — and a ton of batteries, because who knows what you’ll need to use them for?

Or, maybe — just maybe — you went to the hardware store, and battery prices were jacked up, and so you carefully counted how many you needed, and bought only that much.

Disaster pricing often yields more widespread allocation of scarce resources. So everybody has something, and it’s less likely someone’s sitting on water or batteries they don’t need.

via In defense of ‘price gouging’ | Campaign 2012.

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1 thought on “Hooray for Price Gouging! It Makes Sure Everyone Gets A Little Something”

  1. He neglected to mention that price gouging will also encourage potential suppliers to ramp up supplies. If, after the storm clears, I can see from Ohio that people in North Carolina are paying $8,000 for a $1,500 generator, then you can bet that I’m going to drive a couple down there to sell for $7,500. You can also bet that I would beat FEMA to get there.

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