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Earlier quoted context omitted.
What externalities?
One example is a pandemic.
I'm not sure how "pandemic" applies, either.
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So low wage workers should abandon their jobs to spend their time procuring essentials at reasonable prices? Because right now there's a lot of speculation short-term, but things will go back to normal in a week or so after everyone has enough toilet paper to last until 2050. Free market capitalism frequently generates outcomes that are at odds with a functioning society, and this is just another example.
Price isn't just the cost of buying something, it's the reward for producing it. If we see too many price gouging laws, then you can expect shortages as companies find themselves unable to justify extreme measures that would otherwise increase production (at great expense). Secondly, I would expect that localities with price gouging laws will discover that their goods are being re-routed to other places without those…
From an economics stand point, I don't understand why the government should ban price-gouging. Doesn't this place an artificial price ceiling that will ensure a shortage of goods? I would personally rather stores have items such as food/water at marked-up prices than not at all.
Earlier quoted context omitted.
You'll find a similar argument in any basic econ textbook. Put a cap on prices, then when demand rises for something (which normally leads to an increase in price, all other things being equal), the lack of an accompanying rise in price means there is no incentive to produce more of the good (no incentive for more producers to enter the market), so there isn't a corresponding increase in supply. Might work okay in Ch…
Do you actually think our economy needs 200x as much hand sanitizer production? If the demand runs high enough for long enough, it wont be an emergency, and emergency measures don't apply.
Yes I do. If everybody is now sanitising their hands thoroughly and regularly throughout the day to prevent infection, this could easily be a 200x increase in hand sanitizer usage compared to what it was previously.
From an economics stand point, I don't understand why the government should ban price-gouging. Doesn't this place an artificial price ceiling that will ensure a shortage of goods? I would personally rather stores have items such as food/water at marked-up prices than not at all.
Price isn't just the cost of buying something, it's the reward for producing it. If we see too many price gouging laws, then you can expect shortages as companies find themselves unable to justify extreme measures that would otherwise increase production (at great expense). Secondly, I would expect that localities with price gouging laws will discover that their goods are being re-routed to other places without those…
An argument supporting gouging: https://reason.com/2019/01/31/price-gouging-is-supply-and-de...
You'll find a similar argument in any basic econ textbook. Put a cap on prices, then when demand rises for something (which normally leads to an increase in price, all other things being equal), the lack of an accompanying rise in price means there is no incentive to produce more of the good (no incentive for more producers to enter the market), so there isn't a corresponding increase in supply. Might work okay in Ch…
From an economics stand point, I don't understand why the government should ban price-gouging. Doesn't this place an artificial price ceiling that will ensure a shortage of goods? I would personally rather stores have items such as food/water at marked-up prices than not at all.
I think governments would rather that people that get it first have access than the peoplwnehat can't afford it. If you're going to have to essentially have some people not get supplies, basing it off of wealth and income is not politically optimal