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Price gouging is a term of variable, but nearly always pejorative, meaning, referring to a seller's asking a price that is much higher than what is seen as 'fair' under the circumstances. In precise, legal usage, it is the name of a felony that obtains in some of the United States only during civil emergencies. In less precise usage, it can refer either to prices obtained by practices inconsistent with a competitive free market, or to windfall profits. In colloquial usage, it means simply that the speaker thinks the price too high, and it often degenerates into a term of demagoguery. Non-pejorative uses are generally in reaction to what the writer believes is an unjustified restraint on the market. A felony, in many common law legal systems, is the term for a very serious crime; misdemeanors are considered to be less serious. ...
A free market is an idealized market, where all economic decisions and actions by individuals regarding transfer of money, goods, and services are voluntary, and are therefore devoid of coercion and theft (some definitions of coercion are inclusive of theft). Colloquially and loosely, a free market economy is an economy...
All market-based economic theory regards price controls of any kind with suspicion, and many economists reject them utterly, making no exception for short-term controls in a state of emergency. Libertarians are among those who robustly defend the right of firms to charge what they want regardless of the circumstances. In economics, incomes policies are wage and price controls used to fight inflation. ...
See also Libertarianism and Libertarian Party Libertarian,is a term for person who has made a conscious and principled commitment, evidenced by a statement or Pledge, to forswear violating others rights and usually living in voluntary communities: thus in law no longer subject to government supervision. ...
As a criminal offense, Florida's law is reasonably typical. Price gouging may be charged when a supplier of essential goods or services sharply raises the prices asked in anticipation of or during a civil emergency, or when it cancels or dishonors contracts in order to take advantage of an increase in prices related to such an emergency. The model case is a retailer who increases the price of existing stocks of milk and bread when a hurricane is imminent. It is a defense to show that the price increase mostly reflects increased costs, such as running an emergency generator, or hazard pay for workers. Official language(s) English Capital Tallahassee Largest city Jacksonville Area - Total - Width - Length - % water - Latitude - Longitude Ranked 22nd 170 451 km² 260 km 800 km 17. ...
The term is similar to profiteering but can be distinguished by being short-term and localized, and by a restriction to essentials such as food, clothing, shelter, medicine and equipment needed to preserve life, limb and property. In jurisdictions where there is no such crime, the term may still be used to pressure firms to refrain from such behavior. The act of price gouging in an undersupplied market. ...
Some support the ability to raise prices under such circumstances, asserting that government prohibition of the practice is a violation of individual rights or that the ability to raise prices has beneficial effects or both. While some economists who defend the practice use the term "price gouging", others disparage it as merely pejorative.
The term is not in widespread use in economic theory but is sometimes used to refer to practices of a coercive monopoly which raises prices above the market rate that would otherwise prevail in a competitive environment. [1] [2] Alternatively, it may refer to suppliers benefiting to excess from a short-term change in the demand curve. Economics is the social science studying production and consumption through measurable variables. ...
In economics and business ethics, a coercive monopoly is a form of monopoly where all potential competition is effectively barred from entering the market, such that a firm is able to make pricing and production decisions independent of competitive forces. ...
In economics, the demand curve can be defined as the graph depicting the relationship between the price of a certain commodity, and the amount of it that consumers are willing and able to purchase at that given price. ...
Criticism of price gouging
In the United States, laws against price gouging have been held constitutional as a valid exercise of the police power to preserve order during an emergency, and may be combined with anti-hoarding measures. The usual argument is fourfold. Police Power is the inherent authority of a state to pass and enforce laws to protect and promote the public safety, health, general welfare, and morals of a community. ...
Hoarding is the storing of food or other goods. ...
- The community as a whole may well possess sufficient stocks to sustain it through the emergency, provided that panic can be avoided. Sharp increases in price may trigger such panic.
- When people's resources are strained by a situation beyond ordinary prudence, the corrective tendencies of the market are too slow and communication too uncertain.
- In an emergency, ordinary legal protections are impractical. Thus, refusing to sell lumber at an advertised price may constitute fraud and refusing to honor a reservation may constitute a tort, but the harm is likely to be irreparable long before a case can be brought.
- Regardless of theory, when people become desperate, public order becomes precarious. Emergency services are likely to be strained by both increased need and reduced capacity. Riots by otherwise law-abiding citizens could prove overwhelming.
Exceptions are prescribed for price increases that can be justified in terms of increased cost of supply, transportation or storage. Statutes generally give wide discretion not to prosecute: in 2004, the State of Florida determined that one-third of complaints were unfounded, and a large fraction of the remainder were handled by consent decrees, rather than prosecution. In the common law, a tort is a civil wrong, other than a breach of contract, for which the law provides a remedy. ...
It has been designated the: International Year of Rice (by the United Nations) International Year to Commemorate the Struggle against Slavery and its Abolition (by UNESCO) 2004 World Health Day topic was Road Safety (by World Health Organization) Year of the Monkey (by the Chinese calendar) See the world in...
State nickname: Sunshine State Other U.S. States Capital Tallahassee Largest city Jacksonville Governor Jeb Bush (R) Official languages English Area 170,451 km² (22nd) - Land 137,374 km² - Water 30,486 km² (17. ...
DECREE - The judgment or sentence of a court of equity which corresponds to the judgment of a court of law. ...
In support of price gouging or of the liberty to engage in it Many of those who support a right to "price gouging" regard the terminology itself as being designed to create prejudice against a legitimate and beneficial free-market system. They view the rapid increase of prices as a valid system for rapidly distributing scarce resources to those who need them most (as evidenced by what they are willing to offer in exchange) and rewarding those who have prepared for potential scarcity by taking steps to provide the highly desirable resources. Some hold that opponents of the free market prefer systems of distribution based on access to political power or willingness to wait in long lines. They also argue that since these systems do not reward the provider, there is decreased incentive for suppliers to plan for unusual demand situations, causing further scarcity. For with(out) prejudice in law, see Prejudice (law). ...
A free market is an idealized market, where all economic decisions and actions by individuals regarding transfer of money, goods, and services are voluntary, and are therefore devoid of coercion and theft (some definitions of coercion are inclusive of theft). Colloquially and loosely, a free market economy is an economy...
Free market economists Thomas Sowell and Walter Williams, among others, argue against laws that interfere with large price changes. According to this view, high prices can be viewed as information for use in determining the best allocation of scarce resources for which there are multiple uses. They, in effect, reject the term "price gouging," and argue that laws against price increases serve only to restrict supplies of a good or service by reducing the incentive suppliers have to undertake any additional costs, hazards or inconvenience that may be required. They argue further saying that these price increases force consumers to ration goods thus increasing the longevity of certain resources in an emergency. Problems during the 1870 Siege of Paris, which critics attribute to price restrictions, are often held up as an example. In the same vein, economists Jerry Taylor & Peter VanDoren state: "Gougers are sending an important signal to market actors that something is scarce and that profits are available to those who produce or sell that something. Gouging thus sets off an economic chain reaction that ultimately remedies the shortages that led to the gouging in the first place." Thomas Sowell Thomas Sowell (born 30 June 1930) is a prominent American economist, political writer, and conservative-libertarian[1] commentator. ...
This article is about the economist, Walter Williams. ...
1870 was a common year starting on Saturday (see link for calendar). ...
The Siege of Paris lasting from September 19, 1870 – January 28, 1871 brought about French defeat in the Franco-Prussian War and led to the establishment of the German Empire. ...
As a side note, in colloquial terms "price gouging" has come to be somewhat misunderstood by the general public, becoming frequently attached, inappropriately or disparagingly, to any situation where, even in the presence of a free market with many different options, prices rise uniformly for a commodity in high demand. This is not strictly price gouging, i.e. exploiting an emergency situation where the free market participants are facing lack of information or competitors, but rather a populist reaction to a natural (although very sudden) market driven change in prices. An example of this reaction can be seen in the gasoline market in Hawaii, which operates with a relatively sparse number of suppliers and costly infrastructure, though still a fully functioning market environment. In such markets, any increase in price seems to automatically receive the explanation of "price gouging", although no official emergency exists.
In a related topic, the negative associations attached to price gouging can be seen as an offshoot of the phenomenon where customers are highly averse to purely demand-based price changes in some types of goods and services. That is, for certain commodities, where the historical baseline price is widely known, customers exhibit strong negative feelings for prices which change solely based on the number of buyers, without any additional (perceived or real) increases in quality or quantity of goods received. While some goods and services are highly amenable to demand-based pricing, for example, golf course fees or airline tickets, others generate significant negative reaction, such as the failed attempt by one soda distributor to price cans of soda based on the ambient temperature. A standard criticism of such practice is that the pricing bears no relation to any additional cost of doing business -- which would be valid if the obligation of sellers were to simply pass on minimal changes in cost. However, on closer inspection this position is more simply an adverse reaction to the market fact that when a good or service is demanded generally by more buyers, whether or not additional costs have been incurred, or benefits given, sellers will increase the price to balance the supply with demand.
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