'Price Gouging,' For Lack Of A Better Term, Is Good | Stock News & Stock Market Analysis - IBD:
"Economics: Florida grocery store shelves were empty and 40% of the gas stations in Miami were out of gas in advance of Hurricane Irene.
But at least no one is price gouging, right?
Florida, like other states, has a price-gouging law that bans retailers from jacking up prices for food, water, ice, petroleum products and other products during a state-declared state of emergency. Someone caught selling at prices that "grossly exceed" the average over the previous 30 days faces second-degree misdemeanor charges.
...But while Florida's price-gouging law might help protect residents from high prices during an emergency, it can't protect them from the immutable laws of economics.
Whatever the intent of these price-gouging prohibitions, the result is always the same: rampant shortages.
That's because they are, in effect, government-imposed price caps.
And
price caps always produce shortages.
So, while Florida tries to stamp out price gouging, its grocery stores' shelves are empty, and gas stations are running out of gas.
...The truth is that while jacking up prices during an emergency seems unethical, it can be the best way to deal with an emergency situation.
High prices not only discourage hoarders, they also send up a flare to suppliers to rush more into production and bring more into the region.
...As George Mason University economist Tyler Cowen noted, "price gouging, despite its obnoxious-sounding name, is usually the best of a set of bad alternatives.""
