Michael Giberson
Today the Master Resource blog published my list of ten price gouging topics needing economic research.
As I point out in the introduction, many economists think price gouging is too simple to be worth studying. After all, it is just a kind of price cap, and we know how price caps work. My response is that “too simple to be worth studying” is losing the policy battle.
Here is my list of ten topics, see the post at Master Resource for explanations and scattered links to related discussions:
- Economics of odd-even rationing
- Shortages and the hoarding impulse
- Distributional effects of price gouging prohibitions
- Non-price rationing techniques: queuing and beyond
- Short-run elasticity of supply after disasters
- Short-run elasticity of demand after disasters
- Organizational form and price gouging enforcement
- Economics of consumer price complaints
- Studies of price gouging enforcement
- Efficiency defenses of price gouging laws
As a bonus for Knowledge Problem readers only, here is a hot, hot, hot behavioral economics research topic as well:
11. Guilt, shame, trust and fairness in pricing after disasters
Economists are increasingly realizing that it takes much more to make markets work than formal rules and freely moving prices. A host of issues sometimes styled as “culture” or “informal institutions” are also critical in getting things to work. (An aside: I’m looking forward to seeing Virgil Storr’s new book, Understanding the Culture of Markets.)
Guilt, shame, and betrayal are joining reputation as social-psychological factors important to economic activity and respectable enough for economists to work on. Does shaming “price gouging” behavior work to stop post-disaster price increases? Does shaming price gougers encourage or discourage pro-social interaction after a disaster? (I.e. do merchants work harder to bring goods to market yet keep prices low, or do merchants allow shelves to go bare and avoid engaging in costly efforts to resupply?)
Related video from Fox news reporter Arnold Diaz: Shame! Shame! Shame! for Price Gougers.
Also, a letter to the editor in New Jersey proposes the Scarlet Letter approach to shaming convicted price gougers (though the writer omits my related suggestion to also shame consumers who choose to participate in price gouging then call in complaints to the attorney general).