# Price gouging during a hurricane? Them's the free market breaks, folks! **URL:** \ **Category:** The BBQ Pit\ **Created:** [August 31, 2017, 9:34pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200 "2017-08-31T21:34:04Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [September 3, 2017, 6:35pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/61 "2017-09-03T18:35:33Z")
> [@Ruken](#): > > I’m asking them to stockpile and asking that they have incentive to do so, because I don’t have an irrational sense of fairness such that I would prefer people go without over someone making money. You have a point here, and a good reason why, in a disaster like this, it would be appropriate to charge 10-15, maybe 25% more than normal price. If they are charging double, then they are definitely profiting off it much more than their costs of stockpiling, but that’s still not really gouging, though I do feel it’s getting into that realm. We are talking about 1000% or more increases on items, that is gouging, is that what you are defending here, or are you just defending the less than 100% markups that most would not consider to be gouging? ---
**Author:** ![Spectre\_of\_Pithecanthropus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/spectre_of_pithecanthropus/32/12343_2.png) [@Spectre\_of\_Pithecanthropus](https://boards.straightdope.com/u/Spectre_of_Pithecanthropus)\ **Post date:** [September 5, 2017, 3:28am UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/62 "2017-09-05T03:28:41Z")
Isn’t price gouging during natural disasters or other emergencies illegal? A few weeks ago, in reference to the imminent eclipse, a news feature made this point quite clear. There was no limit to the amounts that could be legally charged for food and lodging along the eclipse path, as evidenced by a number of ridiculous hotel and Air BNB rates they reported. But charging people $99 for a bottle of water? Not so much. Of course, the U.S. is a big country with fifty state and thousands of local jurisdictions, so exceptions are possible I admit. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [September 5, 2017, 12:21pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/63 "2017-09-05T12:21:32Z")
> [@John\_Mace](#): > > Lower prices encourages hoarding so net/net fewer people end up with what they need. Keeping prices artificially low without a rationing plan is a recipe for disaster. > > Anyway, I don’t know why anyone would think it’s a market failure if people don’t get what they need-- the free market is not designed to make sure everyone gets what they need. That’s what we have governments for. So governments should commandeer those bottles of water and distribute them for free during hurricanes? I’ve never seen this side of you. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [September 5, 2017, 1:03pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/64 "2017-09-05T13:03:04Z")
> [@Hellestal](#): > > **Inventories are expensive.** > > One of those most basic costs is the plain fact of inventory expense. If we want to encourage businesses to keep more supplies than the everyday non-emergency demand would dictate, then we would need to be able to pay for those inventories with higher margins during emergency situations. In that case, those higher margins would not at all represent extraordinary profits. They can represent the previous cost of those large inventories, kept during times when those larger inventories are extremely unprofitable. It almost never makes sense to keep anything approaching disaster levels of inventory for things like bottled water unless you are anticipating a disaster (e.g. you know a hurricane is coming next week). Competition forces you to have the most efficient levels of inventory you can achieve. Its not just the cost of the actual inventory and spoilage, its the space as well. Those extra inventory costs that you think would justify price gouging during emergencies would make the retailer uncompetitive and drive them out of business. Its the free market in action. The average supermarket keeps enough water/soda/juice, and other life sustaining supplies to supply its local area for three days as long as they don’t let someone come in and buy all the fucking water/soda/juice. With your approach, a wealthy family can just pay $10/gallon for all the gas and all the water because they don’t exercise any price discrimination until stuff hits the thousands and during an emergency, they probably pull out the stops because they are simply not price sensitive at all. Gouging is almost always with respect to inventory that is normally kept on hand or purchased specifically in anticipation of an imminent disaster. > [@](#): > > **High margins do not necessarily mean high profits.** > > If we look at the margin by itself, and dictate without further knowledge that it is “windfall/obscene/massive”, then we’re just speaking from pure ignorance. High margins don’t automatically imply massive profits, not when those margins are compensating other costs that aren’t included in the most direct reading of the margin during non-emergency times. There is cost in keeping large inventories. There is risk in keeping inventories when you don’t know in advance whether those inventories are a prudent investment. Please list the grocery stores and gas stations that keep inventory at disaster levels on a regular basis. Noone does it. The price of stocking all that water and blankets is that you don’t have room for cereal and avacados. Typical inventory management doesn’t really allow for your style of overstocking on stuff like bottled water. Gas stations are even less likely to do so because they would have to install a much larger gas storage tank than they need in the off chance that there is a disaster in the area at some point. The margin on gasoline is thin enough that storing significantly more gas than they need during normal times would drive them out of business in a fucking hurry. > [@](#): > > **There is cost in transporting goods during difficult situations.** > > Transportation costs skyrocket during emergencies. Even if we assume that all the evil local retailers can’t match our own virtuous perfection, it’s still the case that _refilling the shelves_ during emergencies is going to be much more expensive than refilling shelves during normal times, and that cash flow requirements are going to be much different given this additional expense. Managing cash flow is yet another cost that hasn’t seemed to receive much consideration. Businesses need to find some way to refill their inventories, and _it is easier for them to do that_ if they’re charging higher prices for their expensive inventories. This extra cash flow can help with re-supply given non-ideal, and extremely expensive, transportation circumstances. > > **It is ultimately an empirical question of whether higher prices bring more goods to afflicted regions.** > > In economic terms, the question is the “elasticity” of the supply curve during emergency times. Whether or not supply is perfectly inelastic is an empirical question, and cannot be solved by people asserting their own moral superiority without the benefit of any additional thought. We actually have to look at the way the world works to know the answer to this question. I’m far from an expert on emergency economics, so I’m not going to state _ex cathedra_ how reality works here – I simply don’t know – but if supply is sufficiently responsive to price in these cases, then by allowing prices to raise, then we _increase_ the amount of food, water, gasoline, basic medical supplies, and other needful items. That would mean more people get what they need, when they need it. > > And there are at least some reasons to think that supply is not perfectly inelastic even during emergencies. Inventories can be prepared in advance, if it’s not too costly to do so. Even more than that, disaster zones aren’t on the moon. They aren’t disconnected totally from the rest of the world. It’s more costly to transport items, yes, but it’s exactly in that very case where we should expect prices to rise in order for people to be able to cover that cost. It tends to be rare to see perfectly inelastic supply in other contexts, which might give us a hint about this context. Demand slopes down. Supply slopes up. That’s simple, but one of the reasons the idea is so powerful is that it tends to be right so very often. Everything is more costly during emergencies, and that has to be paid for. And it is also possible that the supply curve is not elastic enough during the short term (say the three day aftermath of a hurricane) to justify the distribution of life sustaining supplies based on ability to pay. > [@](#): > > **Using emotionally charged terminology language doesn’t help us think clearly about reality.** > > I’m far from perfectly certain whether supply is sufficiently elastic to justify higher prices in this case, but if it is, then those higher prices are going to get needed supplies to more people, more quickly, at genuinely the lowest cost available given the alternatives. That might not be the case. In certain situations, rationing might be a better plan. (I might suggest hotel rooms here, whose supply can’t be readily expanded on short notice. Maybe Airbnb has changed that situation, tho.) > > The ultimate point is that we want to get supplies where those supplies are needed. It’s a topic that’s worth careful consideration, but when people throw around morally loaded terms, it means they’re already decided what to believe before they’ve even thought about it. “Gouging” is an emotionally charged word. If those high prices are paying for previous inventories, or paying to keep transportation routes functioning, then that’s hardly a story of exploitation. Rather, it’s a story that things are harder to produce during emergencies. Obviously a lot of shitty behavior can happen during a crisis, but a change in prices is not necessarily an example of that. Higher prices might simply reflect the reality of higher costs of supply. Or it might reflect opportunistic price gouging on life sustaining supplies. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [September 5, 2017, 1:04pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/65 "2017-09-05T13:04:38Z")
> [@Hellestal](#): > > Why not? This is the one thing that would be most helpful during emergency. > > If there were more bottles of water in storage, there would be more available during emergencies. If there were more generators in storage, there would be more available during emergencies. If there was more gasoline in storage, there would be more available during emergencies. This “nobody” guy really isn’t very clever, if he’s not suggesting the one thing which indisputably would be most helpful when transportation routes are cut off. People need emergency supplies during emergencies, and it can be expensive to create that supply. Storage is costly, and it needs to be paid for. > > I lived for five years in a typhoon-afflicted region, and after I’ve lived for four years after that in a hurricane-afflicted region. I have large stores of water, and I would like other people to keep large stores of water, too. **The more emergency supplies that are available, the easier things will be during an emergency.** Everyone who is halfway intelligent should be recommending deeper inventories of emergency supplies, rather than the dangerously stupid advice of this silly “nobody” person you’re referring to. > > Everyone in a potential disaster area should have emergency supplies. > > Ideally, that would include retailers, too. I think it would be plenty nice if retailers had more than enough supplies on their shelves even for the most dangerous disasters. It would be helpful, it might even save lives. But that inventory space would have to be paid for. Inventories are expensive. It would require much higher prices during emergency times to offset the massive losses those inventories would incur during more regular times. There is no reason for any retailer to do that, if they’re going to get blamed for “obscenity” for pricing goods according to their actual cost over time. No retailer would survive the competition with that extra overhead relative to a retailer that had a more efficient inventory. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [September 5, 2017, 1:15pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/66 "2017-09-05T13:15:10Z")
Read more carefully and you might manage to respond to the points I actually made. I don’t disagree with a single factual statement I saw in your response, but those statements don’t engage what I was saying. ---
**Author:** ![Evan\_Drake](https://avatars.discourse-cdn.com/v4/letter/e/b487fb/32.png) [@Evan\_Drake](https://boards.straightdope.com/u/Evan_Drake)\ **Post date:** [September 5, 2017, 2:31pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/67 "2017-09-05T14:31:29Z")
> [@actualliberalnotoneofthose](#): > > . Personally, I buy 35-38 packs of water or 24-28 packs for $2.49- $3.99 all day long at the grocery store. You must pee a lot. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [September 5, 2017, 2:57pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/68 "2017-09-05T14:57:47Z")
> [@Damuri\_Ajashi](#): > > So governments should commandeer those bottles of water and distribute them for free during hurricanes? I’ve never seen this side of you. You can probably “see” all kinds of alternative sides to me if you continue to make up stuff that I didn’t say. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [September 5, 2017, 5:54pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/69 "2017-09-05T17:54:52Z")
> [@Hellestal](#): > > Read more carefully and you might manage to respond to the points I actually made. > > I don’t disagree with a single factual statement I saw in your response, but those statements don’t engage what I was saying. I did. You justify price gouging: 1. you seem to say that allowing price gouging is a necessary inducement to get retailers to keep large inventory that would only be necessary during an emergency. I don’t think the most laissez faire attitudes towards price gouging would ever induce any business to keep inventories significantly higher than the optimal level during normal times unless there is an anticipated disaster event in which case there really isn’t a whole lot of extra inventory cost and you probably would have stocked more anyway (in anticipation of higher demand). The reason is because you are right, keeping high inventories are costly and it would put a retailer out of business to keep those large inventories “just in case” The over-inventories gas station and supermarkets would not be able to compete with other gas stations with more efficient inventory in the long run. 2. you seem to say that the additional costs of keeping large inventories might justify current price gouging but you can’t name any businesses that keep this sort of inventory. Noone does this and no one will ever do this. The notion of keeping disaster inventory levels of disaster supplies at retail locations is absurd. It would be like having a solar eclipse store if you didn’t know when solar eclipses would occur until a week ahead of time, except its a lot easier to stock up on bottled water in a week than it is to stock up on solar eclipse glasses in a week. 3. I point out that you can meet most of the immediate disaster needs of an area with rationing instead of relying on the “free market” to distribute life sustaining supplies based on ability to pay. 4. You point out that supply elasticity might be enough to justify price gouging that might get more supplies into a disaster area. I point out that it might not make much of a supply difference at all and all you might be doing is letting the rich feast while the poor starve. Sure supply typically goes up with price but it takes time for the market to react to price signals. The opportunity to price gouge is pretty much over before the week is out and everyone knows it, you need a particularly nimble supplier to be able to make a profit and a difference beyond what can be done by emergency relief organizations and agencies. 5. The term price gouging is an accurate term, emotions and all. You excuse the price gouging with a lot of hypothetical costs without examining if any of those costs are really what leads to the price gouging. When you opportunistically raise prices on life sustaining supplies during a disaster, you are price gouging and I think we can (and probably should) attach a moral element to your behavior. In what way were my posts not responsive to yours? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [September 5, 2017, 5:57pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/70 "2017-09-05T17:57:07Z")
> [@John\_Mace](#): > > You can probably “see” all kinds of alternative sides to me if you continue to make up stuff that I didn’t say. OK so what do you think the government should do? Why isn’t regulation (rationing and price controls) at least as effective as more direct action (bring in water and blankets on helicarriers). ---
**Author:** ![Corry\_El](https://avatars.discourse-cdn.com/v4/letter/c/ecae2f/32.png) [@Corry\_El](https://boards.straightdope.com/u/Corry_El)\ **Post date:** [September 5, 2017, 8:19pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/71 "2017-09-05T20:19:03Z")
> [@Damuri\_Ajashi](#): > > 1. OK so what do you think the government should do? > > 2. Why isn’t regulation (rationing and price controls) at least as effective as more direct action (bring in water and blankets on helicarriers). 1. first because it’s easy. The govt bringing in more water (let’s say it’s water)…provides more water. The govt just controlling the price of water doesn’t bring in any more water, and in fact results in less water being brought in (other than by the govt) than if you let the price of water rise. 2. This isn’t quite as obvious, since for one thing the govt bringing in more water and regulating the price of all water are not mutually exclusive. But the most water would be available if the govt a) brought in as much as it could itself and b) didn’t concern itself directly with what price private water sellers were charging. By not directly I mean besides the important fact that govt bringing in (and presumably giving away or selling at low price anyway) additional water would tend to lower the price private sellers could charge, indirectly. Same goes for charitable orgs. The debate often seems to go on tangent of, ‘scum bags are charging a lot more but charitable people/orgs are giving it away’. OK, but giving it away in significant quantities could have a big effect on how much ‘scum bags’ could charge. But still not obvious because you have to know how much it costs the govt (taxpayers) to bring in water, how much the price would actually rise to balance supply and demand without price limits (either with or without free govt, or charitable org, provided water), etc. There is a practical/empirical aspect to this. I would say it’s sometimes ignored on either side, though in my observation more on the side morally outraged by the idea of letting prices rise. ---
**Author:** ![SteveG1](https://avatars.discourse-cdn.com/v4/letter/s/bb73d2/32.png) [@SteveG1](https://boards.straightdope.com/u/SteveG1)\ **Post date:** [September 5, 2017, 10:01pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/72 "2017-09-05T22:01:11Z")
> [@MrDibble](#): > > Shkreli’s trial was for securities fraud, not price gouging. > > You could argue that the gouging made him a target, but _if he hadn’t also been a fraud_, there would be squat anyone could do about the Daraprim thing, other than release alternatives(as Imprimis subsequently did) . > > And he was, IMO, a standout just because he was both blatant and unrepentant. I think he’s the exception, not the rule. So Shkreli is STILL waiting to be sentenced. Why is it taking so long? He’s been convicted. Lock his ass up already. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [September 5, 2017, 10:06pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/73 "2017-09-05T22:06:17Z")
Let me just say as someone in the path of Irma, that if we’re not going to allow price gouging, that the implicit bargain we are making is that we won’t hoard, thus denying many people any access to needed supplies at all. I’m seeing assholes preparing for the nuclear apocalypse, and actually looking at the faces of people who got no water while they walked out with ten cases. The choices are gouging or rationing, and the retailers have zero incentive to pick that fight with customers. They get the same money regardless and don’t risk creating an incident. If we’re going to ration, the options are either that citizens self-police, or that the actual police enforce anti-hoarding laws. ---
**Author:** ![SteveG1](https://avatars.discourse-cdn.com/v4/letter/s/bb73d2/32.png) [@SteveG1](https://boards.straightdope.com/u/SteveG1)\ **Post date:** [September 5, 2017, 10:08pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/74 "2017-09-05T22:08:44Z")
> [@adaher](#): > > Let me just say as someone in the path of Irma, that if we’re not going to allow price gouging, that the implicit bargain we are making is that we won’t hoard, thus denying many people any access to needed supplies at all. I’m seeing assholes preparing for the nuclear apocalypse, and actually looking at the faces of people who got no water while they walked out with ten cases. > > The choices are gouging or rationing, and the retailers have zero incentive to pick that fight with customers. They get the same money regardless and don’t risk creating an incident. If we’re going to ration, the options are either that citizens self-police, or that the actual police enforce anti-hoarding laws. Get what you need while you can, and stay safe. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [September 6, 2017, 2:04am UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/75 "2017-09-06T02:04:54Z")
> [@Damuri\_Ajashi](#): > > > [@Hellestal](#): > > > > Read more carefully and you might manage to respond to the points I actually made. > > I did. No, you didn’t. Your next sentence is quite a sufficient demonstration of that. > [@Damuri\_Ajashi](#): > > You justify price gouging: I wrote the following in bold in a previous post so that people wouldn’t miss it. But you still missed it. This is a direct quote from that previous post. **It is ultimately an empirical question of whether higher prices bring more goods to afflicted regions.** “Empirical” means looking at reality in order to figure out how reality works. This is in contrast with “theoretical”, which is based more on deductive thinking (or really just pure _storytelling_ in this kind of case). I also wrote the following in a previous post, not originally in bold, but which I’m going to emphasize here since you also missed it the first time. **I’m far from an expert on emergency economics, so I’m not going to state _ex cathedra_ how reality works here – I simply don’t know** “I don’t know” is not a justification for anything. Apart from the indisputable statements like “more water is better than less”, none of my post was an absolute. It was pondering possibilities. If I had wanted to “justify” a position, I would have provided empirical evidence for that position. I didn’t. I didn’t do that, because _I don’t know_. What you don’t seem to understand is that you don’t know either. You’re telling a story that you find compelling. Your story might even be right. But writing a clever argument does not automatically make that story correct, nor does it justify your moral condescension. The entire problem is that we should actually be looking at the empirical evidence before deciding who is evil. It’s a kangaroo court that issues its sentence before looking at the evidence, or even considering what that evidence might look like. I remember a previous discussion on “double taxation” where everyone’s ideological knee jerked so sharply in that thread that no one would actual read what you wrote. You complained about this. You found it frustrating that people couldn’t characterize your post accurately because their ideology got in the way. Well. I’m not going to go through each part of your post because there is no point. You’re just offering a story. Of course, your story might be right. Your explanations might be correct. Totally possible. But you offer no more empirical support than anyone else, and that is, again, the big issue here. Disasters don’t happen very often, and their circumstances aren’t particularly amenable to careful data collection. Data in the social sciences is generally bad, and here it’s even worse than normal. There is a major hurricane approaching the southeast United States right now. I’m actually in South Florida right now, potentially in the path of the storm, so I’m not going to get into a useless back-and-forth with you if you read this post just as carelessly as you did the previous. Or even if you manage a reasoned response. I have more important things to be doing. But I will say that many of the shelves at retailers are already bare. Gas stations are already running out of fuel. It’s Tuesday. The storm doesn’t hit until Saturday, the eye not until Sunday (if it hits at all), and there were no bottles of water, no bread, no D batteries at the two places we visited. Thankfully, we already have lots of water. We have food. We _thought_ we had a backup supply of batteries, but as it turns out, we didn’t. Maybe we misplaced them. We’ll check again, check different places, maybe they’ll get another shipment in. But this gets down, again, to the elasticities of supply and demand. That’s the kind of discussion that cuts to the heart of the matter, but it also seems to be the kind of discussion that’s very hard to have. Unfortunate. But if that’s the way it is, then that’s the way it is. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [September 6, 2017, 3:07am UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/76 "2017-09-06T03:07:34Z")
> [@BobLibDem](#): > > What kind of burden are we placing on merchants? If they were happily selling something for $3 before a crisis, why is it a burden for them to sell it for $3 in limited quantities during the crisis? They aren’t meeting price needs only during a disaster, they are selling for what the free market dictates. The minute that disaster strikes, the free market breaks down. In this case, scarce resources should be allocated to as many people as possible, not to those with the fattest wallets. Actually, if the market broke down, there wouldn’t be the feedback mechanism between perceived scarcity and higher prices in play. Price gouging is actually a classic example of a well functioning market. Basically the whole argument against price “gouging” is the notion that goods with inelastic demand (i.e. things like water, for example) or items without substitutes shouldn’t follow the normal mechanisms of supply and demand, usually out of humanitarian considerations, rather than purely economic ones. It’s also that inelastic demand and lack of substitutes during crises that make the prices go so high; people need water to live, gas to get around, etc… so in conditions where they can’t take the bus, or drink from the faucet, prices go up… because they can. At some point though, substitutes DO come into play, either through hasty introduction by competitors, or because previously unattractive substitutes become attractive due to high prices. Sometimes the price fluctuations are due to sheer stupidity; recently here in Dallas, we’ve been enduring a sort of gas panic, that’s entirely based in the perception that gas supplies MUST be tight, and prices about to rise dramatically. So the dipshits around here have been filling up repeatedly and CAUSING the panic, when all industry sources are pointing out that there’s not much of a supply crunch, and not much of a projected price increase. Yet we have $3+ a gallon gas and about half the stations are gas-less because of morons who have drunk the kool-aid and are filling up whenever they can, putting unusual strain on the resupply system… for no real reason other than dumbassery. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [September 8, 2017, 12:51pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/77 "2017-09-08T12:51:22Z")
First of all stay safe, I consider you one of the more relevant posters on this board. > [@Hellestal](#): > > No, you didn’t. > > Your next sentence is quite a sufficient demonstration of that. > > I wrote the following in bold in a previous post so that people wouldn’t miss it. But you still missed it. This is a direct quote from that previous post. > > **It is ultimately an empirical question of whether higher prices bring more goods to afflicted regions.** > > “Empirical” means looking at reality in order to figure out how reality works. This is in contrast with “theoretical”, which is based more on deductive thinking (or really just pure _storytelling_ in this kind of case). I also wrote the following in a previous post, not originally in bold, but which I’m going to emphasize here since you also missed it the first time. > > **I’m far from an expert on emergency economics, so I’m not going to state _ex cathedra_ how reality works here – I simply don’t know** > > “I don’t know” is not a justification for anything. Apart from the indisputable statements like “more water is better than less”, none of my post was an absolute. It was pondering possibilities. If I had wanted to “justify” a position, I would have provided empirical evidence for that position. I didn’t. I didn’t do that, because _I don’t know_. What you don’t seem to understand is that you don’t know either. You’re telling a story that you find compelling. Your story might even be right. But writing a clever argument does not automatically make that story correct, nor does it justify your moral condescension. The entire problem is that we should actually be looking at the empirical evidence before deciding who is evil. > > It’s a kangaroo court that issues its sentence before looking at the evidence, or even considering what that evidence might look like. What you are calling storytelling and clever argument might also be called analysis and reasoning. Noone is going to inventory disaster levels of supplies during normal times. NOONE. The closest I think you will get is retailers stocking up on disaster supplies in the days ahead of a predictable disaster like a hurricane. Like I said, show me one retailer that stocks disaster levels of supplies in areas where price gouging is permitted? If price gouging could actually induce people to stock disaster levels of inventory, you would think someone somewhere would be doing it, but they’re not. Isn’t the lack of any evidence actually a form of empirical evidence? You say that high prices (and we are talking about price gouging levels of pricing) might reflect high costs and you once again refer to inventory costs and so I ask you to point to the retailer that is actually incurring these high costs. > [@](#): > > I remember a previous discussion on “double taxation” where everyone’s ideological knee jerked so sharply in that thread that no one would actual read what you wrote. You complained about this. You found it frustrating that people couldn’t characterize your post accurately because their ideology got in the way. I impose a moral component to people who price gouge life sustaining supplies. I never once criticized people who price gouged the solar eclipse glasses in the wake of the irrational hysteria surrounding blindness during the solar eclipse. But life sustaining supplies are different. > [@](#): > > Well. > > I’m not going to go through each part of your post because there is no point. You’re just offering a story. Of course, your story might be right. Your explanations might be correct. Totally possible. But you offer no more empirical support than anyone else, and that is, again, the big issue here. Disasters don’t happen very often, and their circumstances aren’t particularly amenable to careful data collection. Data in the social sciences is generally bad, and here it’s even worse than normal. > > There is a major hurricane approaching the southeast United States right now. I’m actually in South Florida right now, potentially in the path of the storm, so I’m not going to get into a useless back-and-forth with you if you read this post just as carelessly as you did the previous. Or even if you manage a reasoned response. I have more important things to be doing. > > But I will say that many of the shelves at retailers are already bare. Gas stations are already running out of fuel. > > It’s Tuesday. The storm doesn’t hit until Saturday, the eye not until Sunday (if it hits at all), and there were no bottles of water, no bread, no D batteries at the two places we visited. Thankfully, we already have lots of water. We have food. We _thought_ we had a backup supply of batteries, but as it turns out, we didn’t. Maybe we misplaced them. We’ll check again, check different places, maybe they’ll get another shipment in. But this gets down, again, to the elasticities of supply and demand. That’s the kind of discussion that cuts to the heart of the matter, but it also seems to be the kind of discussion that’s very hard to have. > > Unfortunate. But if that’s the way it is, then that’s the way it is. Why don’t you just get out of there? Is it safe where you are? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [September 8, 2017, 12:53pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/78 "2017-09-08T12:53:53Z")
> [@bump](#): > > Actually, if the market broke down, there wouldn’t be the feedback mechanism between perceived scarcity and higher prices in play. Price gouging is actually a classic example of a well functioning market. > > Basically the whole argument against price “gouging” is the notion that goods with inelastic demand (i.e. things like water, for example) or items without substitutes shouldn’t follow the normal mechanisms of supply and demand, usually out of humanitarian considerations, rather than purely economic ones. > > It’s also that inelastic demand and lack of substitutes during crises that make the prices go so high; people need water to live, gas to get around, etc… so in conditions where they can’t take the bus, or drink from the faucet, prices go up… because they can. > > At some point though, substitutes DO come into play, either through hasty introduction by competitors, or because previously unattractive substitutes become attractive due to high prices. > > Sometimes the price fluctuations are due to sheer stupidity; recently here in Dallas, we’ve been enduring a sort of gas panic, that’s entirely based in the perception that gas supplies MUST be tight, and prices about to rise dramatically. So the dipshits around here have been filling up repeatedly and CAUSING the panic, when all industry sources are pointing out that there’s not much of a supply crunch, and not much of a projected price increase. Yet we have $3+ a gallon gas and about half the stations are gas-less because of morons who have drunk the kool-aid and are filling up whenever they can, putting unusual strain on the resupply system… for no real reason other than dumbassery. Isn’t market panic or market hysteria a form of market failure? ---
**Author:** ![Folacin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/folacin/32/3195_2.png) [@Folacin](https://boards.straightdope.com/u/Folacin)\ **Post date:** [September 8, 2017, 2:48pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/79 "2017-09-08T14:48:10Z")
> [@Corry\_El](#): > > 1. first because it’s easy. The govt bringing in more water (let’s say it’s water)…provides more water. The govt just controlling the price of water doesn’t bring in any more water, and in fact results in less water being brought in (other than by the govt) than if you let the price of water rise. But if there were a way for the retailers to resupply normally, then presumably the price wouldn’t rise much, because of competition. The problem price gouging laws are attempting to address is that retailers are selling existing inventory at much higher prices to people who are in a captive market. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [September 8, 2017, 3:25pm UTC](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200/80 "2017-09-08T15:25:26Z")
> [@Folacin](#): > > But if there were a way for the retailers to resupply normally, then presumably the price wouldn’t rise much, because of competition. The problem price gouging laws are attempting to address is that retailers are selling existing inventory at much higher prices to people who are in a captive market. People and goods were moving in and out of Houston before, during, and after the hurricane. Not on every road. Not to and from every single neighborhood. But hardly captive. We have posters using words like “helicarriers” when trucks were doing the job. No, retailers were not “resupplying normally”. So we can’t expect normal supply chain efficiencies. I’m not so against people making money that I would prefer for people in need to go without. [Previous page](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200.md?page=3) [Next page](https://boards.straightdope.com/t/price-gouging-during-a-hurricane-thems-the-free-market-breaks-folks/795200.md?page=5)