Mark Kleiman addresses an issue that has always puzzled me:
Florida authorities report a wave of price gouging in the wake of Hurricane Charley, and promise to enforce Florida’s anti-gouging laws.
Some of this is fairly straightfoward enforcement against bait-and-switch and false advertising, and raises no conceptual problems.
But from the viewpoint of orthodox economic analysis it’s hard to explain exactly why it’s wrong, in the wake of a disaster, for someone who has a limited amount of ice or gasoline or tarpaper to sell, and a large number of customers for it, to charge whatever the market will bear…
It’s not hard to come up with practical reasons to dislike price-gouging. Disasters call for, and in healthy societies elicit, altruism and solidarity, and price-gouging as a practice probably does something to suppress those valuable reactions. But some of that analysis also applies to other sorts of economic regulation that free-marketers are unequivocal in denouncing.
I can see both sides of the argument; my point here isn’t that anti-gouging laws are wrong, but that they ought to be controversial in a way they currently are not, at least among those who consider themselves principled advocates of laisser-faire.
Read the whole thing.