- Jeff Ely, Cheap Talk, blogged “Price Gouging“
- Tyler Cowen, Marginal Revolution, responded with “Price gouging and the elasticity of supply“
- David Henderson, EconLog, “Jeff Ely on Price Controls During Disasters“
- Matt Zwolinski, Bleeding Heart Libertarians, “Price Gouging Roundup“
- Sandeep Baliga, Cheap Talk, adds, “Why is there no price gouging in NYC?“
- Baliga linked to this NPR story by Jacob Goldstein, “Why Economists Love Price Gouging and Why It’s So Rare“
- Rob Port, SayAnythingBlog, provides the standard economist’s defense of price gouging in “In Defense of ‘Price Gouging’“
A great burst of attention to price gouging economics. When i have a bit more time, I’ll come back to this discussion. But here is my quick surmise:
Even in Ely’s fixed supply situation and following Ely ignoring producer surplus, if you assume a fixed supply of bottled water and a queue of consumers each with a declining marginal utility for bottled water, it is easy to cook up examples in which a price cap mis-distributes water to the first several customers in line.
Cowen is right to point out that even in the short run supply is usually less than perfectly inelastic. In the longer run dynamic effects are also important.
Of course those first lucky customers could re-sell water to the less fortunate folks in the back of the queue … for the right price.
ADDED from newspapers and other media:
- Matt Yglesias, Slate, “The Case for Price Gouging” <== Best short column on price gouging.
- Holman Jenkins, at the Wall Street Journal, “Hug a Price Gouger” <== Also good
- Tiffany Hsu, Los Angeles Times, “Hurricane Sandy: Food safety, closed stores, anti-price gouging“
- Bernice Napach, CNBC/Yahoo Finance, “Price-Gouging Dings Consumers Amid Storm Frenzy“
And one last blogger, David M. Brown at Mises Daily, “Price Gouging Saves Lives in a Hurricane.” (Which is a recycling of Brown’s post-Hurricane Charley price gouging post.)