Why have 31 states passed anti-price gouging laws (and 19 not)?

Michael Giberson

Cale Davis, in partial fulfillment of the requirements for the degree of Master of Science in Applied Economics at Montana State University, produced a thesis examining why some states do and others don’t have anti-price gouging laws. 

The abstract of “An Analysis of the Enactment of Anti-Price Gouging Laws“:

Anti-price gouging (APG) laws are state-level price controls only effective during times of emergency. From standard economic analysis, there are no apparent beneficiaries from price ceilings. Thus, the enactment of APG laws is puzzling from an economic perspective. The passage of APG laws is first analyzed with case studies of all thirty-one state laws. The case studies include information such as disasters that triggered the enactment of the laws, detail on enforcement and penalties, and information on supporters and opponents. This information is used to help determine why policymakers enact the laws. From the case studies, it is apparent that state officials devote significant resources to enforcing APG laws. Thus, it can be concluded that APG are not symbolic, toothless measures. A general lack of understanding of markets also appears to play a role in the laws’ enactments. Additionally, there are case studies of twelve states that do not currently have APG laws. In general, these states have either taken enforcement action without APG laws or considered an APG bill that ultimately failed. The enactment of the laws is also investigated with statistical models. The passage of APG laws is found to be associated with disaster variables like precipitation, hurricanes, and earthquakes. There is mixed evidence that poorer states are more likely to enact APG laws. More Democratic states are not more apt to adopt APG laws. Lastly, income dispersion and gas prices have no measurable effect on APG law passage.

The issue is understudied so this research makes a useful contribution to the economics literature. In fact, I don’t know of anything else quite like this research on price gouging policy.

This year’s Berlin wall 20th anniversary

Lynne Kiesling

A couple of nights ago I was reading Matt Welch’s introduction to the November issue of Reason, in which Matt wonders why we have heard so little discussion of the defeat of communism on its 20th anniversary. This fall is the 20th anniversary of the fall of the Berlin wall on November 9, 1989, with rumblings and precursors starting as early as August in Hungary, near Lake Balaton, when Austria opened its border to those wanting to cross the Iron Curtain.

Twenty years later, the anniversary of that historic border crossing was noted in exactly four American newspapers, according to the Nexis database, and all four mentions were in reprints of a single syndicated column. August anniversaries receiving more media play in the U.S. included the 400th anniversary of Galileo building his telescope, the 150th anniversary of the first oil well, and the 25th anniversary of Teenage Mutant Ninja Turtles. A Google News search of “anniversary” and “freedom” on August 23, 2009, turned up scores of Woodstock references before the first mention of Hungary. …

In 1988, according to the global liberty watchdog Freedom House, just 36 percent of the world’s 167 independent countries were “free,” 23 percent were “partly free,” and 41 percent were “not free.” By 2008, not only were there 26 additional countries (including such new “free” entities as Croatia, Estonia, Latvia, Lithuania, Serbia, Slovakia, and Slovenia), but the ratios had reversed: 46 percent were “free,” 32 percent were “partly free,” and just 22 percent were “not free.” There were only 69 electoral democracies in 1989; by 2008 their ranks had swelled to 119.

As November 9 approaches, I was happy this morning to find Timothy Garton Ash’s article in the New York Review of Books, reviewing nine (!) books analyzing and exploring various aspects of the momentous events in 1989. Ash’s thoughtful review includes insightful comments on hindsight bias in history, and the extent to which the events of 1989 were “multiple interactions not merely of a single society and party-state, but of many societies and states, in a series of interconnected three-dimensional chess games.” I particularly appreciated his remark on the faulty expectations of the superpowers:

It is perhaps a characteristic of superpowers that they think they make history. Big events must surely be made by big powers. Yet in the nine months that gave birth to a new world, from February to November 1989, the United States and the Soviet Union were largely passive midwives. They made history by what they did not do. And both giants stood back partly because they underestimated the significance of things being done by little people in little countries.

So I hope that these works, and Ash’s review, make Matt a little more sanguine, as well as reminding us all of the perils of centralized political power in all of its forms and the value that is unleashed when that centralized power crumbles.

Florida price gouging laws: too vague or just flexible?

Michael Giberson

ExxonMobil, among the companies under investigation by the Florida Department of Agriculture and Consumers Services for price gouging following Hurricane Ike, has asked the state agency to explain just what price gouging is according to Florida law.

[ExxonMobil] officials claim the state’s rules for price gouging are too broad.

They have written to the Department of Agriculture asking for a definition of what’s considered price going during a state of emergency. They say if they don’t get a clarification, ExxonMobil may be forced to stop doing business in Florida.

State agriculture officials say the statute is written to provide some flexibility so that the agency can determine what is price gouging on a case-by-case basis.

The Florida Agriculture Commissioner, Charles Bronson, said the law doesn’t need to be clarified:

“We happen to think they’re very clear. We’ve ruled on them a number of times with a number of different businesses and we believe that we’re just going to go ahead the way we’ve been and that the law is the law, it’s pretty well spelled out. They should not have increased the price of fuel during that time and just as we’ve done with other businesses we’re gonna fine them.”

At issue are the meaning of phrases like “unconscionable price” and “gross disparity.”

The Miami Herald, reporting the same story, adds:

For the past year, Bronson’s agency has been investigating whether ExxonMobil overcharged suppliers in the days and weeks after Hurricane Ike struck the state in September 2008. The company has not been charged with any violations and notes that it has never been found to have violated price gouging laws.

Also see a Palm Beach Post story.

(In addition to prosecuting gasoline retailers and wholesalers who have charged unconscionably high prices, at least in the eyes of the Florida state government, the Department of Agriculture and Consumer Services is also responsible for prosecuting gasoline vendors who charge unduly low prices.  See this story from 2002 in which the state sued Amerada Hess for selling gasoline ‘below cost’ after a competing retailer complained.)

Laura Levine rock & roll photography

Lynne Kiesling

Courtesy of this Boing Boing post, I am enjoying Laura Levine’s rock & roll photographs very much. Is that Michael Stipe with hair?

See more of her excellent photos here. The early R.E.M. photos are charming, and the Michael Hutchence photos are bittersweet. And I love the Iggy Pop/Chrissie Hynde photo; I’m on a bit of an Iggy Pop kick right now (Lust For Life!) …

Only possible in a politics-free world …

Lynne Kiesling

Too bad that David Zetland’s latest idea is impossible in a world with politics:

People are discussing a soda tax. Forget that — just stop subsidizing the corn that’s made into the HFCS that goes into soda.

End obesity and a stupid ag subsidy at that same time.

Next!

My version for health care would be

People are discussing health care legislation and new government mandates. Forget that — just stop giving employer-provided health insurance asymmetric and favorable tax treatment.

End perverse cost-increasing incentives and a subsidy that clogs up labor mobility at the same time.

Next!