A significant water main break affecting over 2 million people in the suburban Boston area has lead the Massachusetts Governor Patrick Duval to declare a state of emergency. A boil water order is also in effect. Subsequently, the Governor directed the state’s Division of Standards “to closely monitor bottled water prices in areas affected by the weekend’s water emergency, including inspecting stores in the region and responding to potential consumer complaints of price gouging.”
Massachusetts Attorney General Martha Coakley said her office “will be sending out inspectors to review reports of price gouging and also conduct spot-checks of local businesses …. If we discover that businesses are engaging in price gouging, we will take appropriate legal action.”
This is odd, because, so far as I can tell* no law in Massachusetts prohibits price gouging on bottled water. The state’s price gouging law only applies to petroleum-related businesses selling petroleum products at an unconscionably high price in limited circumstances. (Text of the state’s price gouging law; see also a state-by-state description of price gouging limits and the discussion of Massachusetts in Cale Davis, “An analysis of the enactment of price gouging laws,” pp. 46-47.)
So my conclusion is that the Governor and the Attorney General are intentionally deceiving retailers about the state’s price gouging law as a kind of underhanded moral suasion intended to deter price increases on bottled water.
ALSO NOTED: The Boston Globe story which includes the AG’s statement (linked above) also details the extensive extra efforts some local water bottling companies are going to in order to increase production and distribution efforts over the weekend.
In related action, just last week residents in Concord, Massachusetts voted to ban all sales of bottled water.
*I am not an attorney nor expert on Massachusetts law, I’m just an economist that studies price gouging. If I’ve overlooked some relevant portion of the state’s price gouging authority, please let me know.