In addition to the carnage and descruction that Hurricane Sandy brought to the Northeast, the people living in the affected areas have also experienced shortages of epic proportions. Lines have become the norm as people struggle to purchase necessary goods such as gas, batteries, and bottled water. Are the shortages of these scarce resources inevitable or can something as simple as price gouging alleviate the problems? Read the following articles and answer the questions below.
http://www.forbes.com/sites/artcarden/2012/11/04/want-to-end-sandy-shortages-let-gougers-gouge/
http://business.time.com/2012/11/02/post-sandy-price-gouging-economically-sound-ethically-dubious/
http://www.voanews.com/content/new-york-officials-work-to-curtail-price-gouging/1541504.html
http://knowledgeproblem.com/2009/05/13/price-gouging-is-it-wrong-should-it-be-against-the-law/
Discussion Questions:
- What is the strongest argument in favor of price gouging?
- What is the strongest argument against price gouging?
- Is price gouging a necessary aspect of capitalism that should be encouraged or does the practice do more harm than good? Explain.
123 comments:
Matthew B.
Response to Question One: The strongest argument in favor of price-gouging is that price-gouging is simply prices being controlled by supply and demand; price-gouging is basically the free market controlling itself.
Response to Question Two: The Strongest argument in opposition to price gouging is that it protects consumers from being exploited by businesses; people against price-gouging claim that businesses are greedy and will stop at nothing to make more money, even if it means hurting consumers that are just beginning to recover from a natural disaster such as Hurricane Sandy.
Response to Question Three: In my opinion, price-gouging is a necessary aspect of capitalism that should be encouraged. For example: in the aftermath of Hurricane Sandy, people would wait on line for hours for petrol because they expected that petrol would become more difficult to obtain; many of these people, had more than half a tank of petrol and would fill up "just to be safe." If the laws that restricted price-gouging were inexistent, these people would have not paid more, let's say hypothetically six dollars a gallon, for the petrol they really didn't need, while the people whose cars are about to run dry would be able to obtain petrol while waiting on shorter, if any, lines. The shortages in petrol we have seen in the past few weeks after Hurricane Sandy is all directly caused by the laws prohibiting price-gouging, which is basically a price ceiling. Therefore, price-gouging is essential to a healthy laissez-faire capitalist economy and should not be restricted by the government.
Chris D.
Response to Question One: The strongest argument in favor of price gouging is that price gouging is simply the laws of supply and demand working as they should. This is the basic economic logic for letting supply and demand work its magic. In a capitalistic society prices are not set by moral or legal restrictions. In the midst of a disaster with supply limited and the demand for gas high, prices are supposed to rise. That is the economics invisible hand at work. Price gouging also create incentives for people to think harder about what they really need, and rewards for vendors who manage their inventories well. Price gouging in theory should help shrink lines and reduce shortages.
Response to Question Two: The strongest argument against price gouging is that it is morally wrong, and it impairs equitable access to different kinds of customers. Gouging victims of disaster reflect a lack of respect for the victims, and interfere with potential buyers and sellers. Price gouging gas, and other items where the demand is high and the supply is low, takes the poorer members of society out of the market. A lot of people think laws against price gouging are necessary to keep people from being exploited. All in all price gouging can be morally problematic and objectionable in the community.
Response to Question Three: In my opinion price gouging is a necessary aspect of capitalism, and should be encouraged. For example: If the price of gas was $14 per gallon after a natural disaster, but is controlled at $4 per gallon by government fiat, someone who values their time at $10 and hour, would be willing to wait in line for an hour to get a gallon of gas. When people can pay with money, both buyers and sellers benefit. When people pay by waiting in line, resources such as time and energy are wasted. Price ceilings set by the government create shortages in resources, which we have seen in gas in the last few weeks.
Peter T.
Response to 1: The main argument in favor for price gouging is that it allows for the stable supply and demand curves. Eventually, as supply decreases, and the price stays the same, more and more people are willing to purchase gas. If price gouging were allowed, there would be no such thing as long lines and people would conserve gas and drive less.
Response to 2: The main argument against price gouging is that it is ethically wrong for businesses to hurt customers. When a price ceiling is created, it allows for people to purchase necessary items at a affordable normal cost. In the case of hurricane Sandy, some gas stations were charging $5 a gallon. This is completely illegal for the right reason. Consumers shouldn’t be taken advantage of.
Response to 3:The practice of price gouging hurts the economy. In the case of a local emergency like hurricane sandy, businesses charging much more for gas, food supplies, or medical supplies is very immoral. It takes away from the relief effort. In a normal situation, let a gas station gouge its prices. There are plenty other stations that have normal prices. If every station does it, the government should step in. But in the case of a natural disaster, businesses shouldn’t raise prices in order to make the relief effort even harder on the average person. The gas lines in the after math of Hurricane sandy aren’t because of the lack of price gouging, but rather because of lack of supply while the demand is relatively the same. Price gouging wouldn’t solve anything because people still need gas to get to work and do their jobs. Maybe the lines would disappear if gas were to say $7, but seriously who is willing to pay that. Charging more will just hurt our society.
Response to 1: The main argument in favor of price gouging are that people would be more cautious about what they are doing and conserve more, thus only buying when they really need it. Also, price gouging will help stabilize the supply and demand curves by raising prices accordingly to situations.
Response to 2: One reason why price gouging should not take place is that it is morally wrong. For example, people who are poorer than others may not be able to receive the product, such as gas if its price were to be raised. Not everyone will be able to afford a certain good if it is price gouged, leaving the public angry. Many consumers will be hurt rather than helped in this case.
Response to 3: I do not feel that price gouging is a necessary part of capitalism. It can be explained best by using the example of Hurricane Sandy. In this case, there is a shortage of gas; however, the prices have remained the same. If gas stations raised their prices considerably, then less people would buy gas simply because maybe they cannot afford it. This is not fair to the public because people still need to go about their daily lives and need to drive. It is not the place of the market to try to have people conserve their gas, etc. I feel that price gouging would do more harm to the public consumers than good, and should not be put in place.
Kavita J.
Response to Question One: The strongest argument in favor of price gouging is that price gouging allows supply and demand curves to stabalize. Price gouging is just the free market, and when the free market is allowed to run its natural course without interference from government the lines disappear. By forcing prices to remain low, you keep suppliers out, increasing shortages. In addition, by keeping prices high consumers ultimately benefit. Many believe that the time and money spent for filling up their tanks are worth it, but if price of gas or any other good increases, people will be more cautious in buying them and spending them
Response to Question 2: The strongest argument against price gouging is morally wrong, but not because it supposedly causes direct harm or economic inefficiency because it doesn’t, but rather because it impairs equitable access to essential needs of consumers. Although price gouging may be good for the free market, and a natural result of disaster like this, raising prices and preventing people who may need a good but just can’t afford it anymore is wrong.
Response to Question 3: I feel that price gouging is a necessary part of capitalism. Price gouging is the natural effect of supply decreasing and demand increasing. In the aftermath of Hurricane Sandy, gas lines have been extremely long because people are afraid that they won’t get gas in the near future. People with half tanks and even almost full tanks are waiting on line just to “stay on the safe side.” By increasing the price of gas, only those who truly need it would wait in line to fill up their tanks or containers for generators, shortening the lines and saving consumers their time. In addition, with the increase in price, suppliers would be more willing to travel further to supply stations with gas because it is an opportunity to make more money. Furthermore, if price increases, demand would slowly decrease therefore eventually decreasing price. Price gouging is a natural part of a capitalistic society, and should be allowed to run its natural course.
Mark R. (the combination of my Google name and this name definitely does not reveal my full name to the internet)
Response to 1: The strongest argument favoring price gouging is that it is the market regulating itself. When supply decreases and demand increases, the equilibrium price naturally rises. This will make shortages and lines effectively disappear. Also, an increased price caused by an increased demand will result in an increase in quantity supplied, further easing the gas shortage.
Response to 2: The strongest argument against price gouging is that it immorally hurts consumers. By allowing retailers to charge excessive prices, they can take advantage of desperate buyers and make money for themselves. This may also not be passed to suppliers, not creating incentives to increase supply.
Response to 3: I believe that, to some extent, price gouging is a necessary part of capitalism. As the totally-not-right-wing Fox News writes, a command economy could order suppliers to send gas and other necessities to disaster-hit areas. In a capitalist economy, this incentive comes from increased profits due to increased sale prices in those areas. The banning of price gouging makes it uneconomical to ship gas from other reasons to the Northeast, even though there are people willing to pay more for it here but cannot get it. Increases in prices will also naturally cut down lines, as retailers will continue to increase prices as long as they have buyers and those who do not value their time as much as the increased monetary cost and stockpile gasoline unnecessarily will cease to do so. However, complete lack of regulation will still allow retailers to charge unreasonable prices for a product necessary to function in the modern world. The complete banning of price gouging is not economical and can only hurt the majority who need gas, but not regulating it at all can hurt vulnerable consumers who would be forced to pay exorbitant prices: allowing moderate increases in prices will protect consumers while cutting lines and increasing the quantity of goods supplied.
Danielle D.
Response to Question One: The strongest argument in favor of price gouging is that price gouging is simply the free market working itself out. Price gouging allows the laws of supply and demand to function properly. When markets are able to “work their magic,” lines inevitably disappear. If gas stations could raise prices, greedy drivers would wait to refill their tanks; they would drive less and drivers who really need gas would be able to get it.
Response to Question Two: The strongest argument against price gouging is that it is unethical and morally wrong. Laws restricting price gouging are believed to protect consumers from being taken advantage of. Jeremy Snyder describes price gouging “as a kind of failure of respect for others because it impairs equitable access to essential needs of consumers.” If a cab driver charges $30 for a $10 ride and a hotel manager charges $800 for a $300 room, consumers are hurt due to greed.
Response to Question Three: Before reading these articles and researching the positive and negative effects of price gouging, I assumed price gouging was simply immoral. Many people still believe that price gougers’ selfishness negatively affects the economy; however, that is far from true. Laws against price gouging create shortages. But letting merchants raise their prices creates much-needed incentives for people to think harder about what they really need and rewards venders who manage their inventories well. Because leaders are afraid to allow price gouging and to let the economy work itself out, people are paying by waiting in line, and their time and energy is being wasted.
Sehar L.
1.The strongest argument made in favor of price gouging is that it is the natural course the economy wants to take and with the invisible hand in a capitalistic society it will balance itself out. By increasing the price of gas people would not be inclined to pay for gas unless they have a need for it which would decrease the lines for the people who actually have a higher necessity for the gas. Also if suppliers were allowed to increase the prices during times of disaster more suppliers would desire to join the market in order to produce a profit, and thus the area affected by disaster would receive an increase supply of what it needs. Overtime the increased suppliers would result in increased competition that would push the price back down.
2.The strongest argument made against price gouging is that a few amount of people benefit while taking advantage of others during bad situations. It is immoral to let certain individuals make a profit by raising the price of essential goods so high that the necessary goods are no longer equally accessible to consumers during times of disaster.
3.In my opinion I understand that in our capitalistic society price gouging is actually letting the invisible hand work out through our economy and overtime increased competition will bring the prices back down, however I do not believe it is ethical during times of serious disasters to force people who have already suffered to pay higher prices so certain individuals can make a profit.
Emily Y.
Response to question one: The strongest argument in favor of price gouging is that price gouging allows the free market to regulate itself. The laws of supply and demand state that if supply decreases and demand increases, it is only natural to allow prices to increase. By letting the economy run its course, it will solve other problems such as long lines, and this would help both the consumer and business.
Response to question two: The strongest argument against price gouging is that it is morally wrong to subject people to higher prices when there are other factors putting a strain on the consumer. For example, people have to pay for damages that the hurricane caused. To fix a part of your house is costly, and people believe that a necessity such as gas should not be gouged.
Response to question three: I do believe that price gouging is a necessary aspect of capitalism because it is unfair for a business to lose money while the consumer isn’t directly affected. However, I don’t think it should be encouraged as a normal practice, but only when it is necessary. I do understand the anger that price gouging would cause because it is not only gas stations that are under strain from the hurricane. Every business has been affected, whether it is by direct damage or loss in profit. To spend more on a necessity such as gas seems almost absurd, and under economic hardship, it only seems unfair. In the case of hurricane Sandy, I do think it is necessary for prices to increase in order to help businesses. Gas stations are frequent places of violence due to increased tensions with people, and this is another strain on the business. Also, many people are wasting precious time waiting on lines that can exceed over thirty minutes. These two scenarios are not ideal to anyone, so price gouging would eliminate this.
Danielle R.
1. Many people that price gouging is an effective strategy for gasoline suppliers that have been affected by Hurricane Sandy. Without price gouges, we get shortages; and with these shortages, we get a frustrated society. Frustration results because people will be waiting on lines for hours to get gas when they could be doing something else, like going to work. The cycle of shortages and frustration continues as long as price gouges are not available. But when we do have price do have price gouges, shortages go away and the free market can go on its way. Price gouges help regulate the supply-demand curve between gasoline supply and consumer demand. When prices go up, people under these circumstances tend to wait for gas prices to drop which makes the gas lines significantly short. Once these lines are shortened, people who really need gas will be able to get gas quickly and be able to move on with their lives. If the gas prices increase, entrepreneurs that sell their gas to stations will be more tempted to sell gas to a higher revenue station than others that stay at our normal prices. Furthermore, more gas would be supplied to the island and lines would become shorter if price gouging happened.
2. In this situation where many people are without some of the most basic necessities like food, heat, water, and shelter, we must ask ourselves: should gasoline prices go up even though people have lost so much? On an ethical level, price gouging should not go up because it hurts the people. If prices go up, people that have been affected by Sandy will not be able to pay for gas. Some people may need repairs on their home while others may need to buy a generator, usually can be costly, if they do not have power. If one cannot pay for gas then many other problems can arise. For example, without gas you might not be able to drive to work or to a desired destination. People will be extremely angry if they miss work because it will set them back even more when getting gas because know they may not be making income. Many believe that gas prices are high enough and if they go higher, especially in this situation, people will be put in a worse situation than they are already in.
3.Personally, I believe that price gouging is a necessary aspect of capitalism; however, I do not believe that it should encouraged by society during certain situations. Price gouging is a natural strategy used by businesses, and this strategy tends to let the invisible hand do its work in our economy. Here we can let our supply-demand curve get to a natural equilibrium which tends to lessen shortages when there is a price ceiling. I would not say that price ceilings should not be followed or that they do not matter but in certain situations the rules should be bent a little. For example if there is an apartment for rent and there is a low price ceiling placed on it, then there will be more people demanding the apartment. Thus, this price ceiling will cause a shortage of apartments for consumers. However, if the price ceiling was levied and the supplier could make the apartment whatever price he pleased, then the supply-demand curve would go equilibrium. At a higher price less people would go for that apartment and wait for the next opening, while some would buy it and be satisfied. However, with the aftermath of Hurricane Sandy I doubt someone would by an apartment, especially anywhere near the water. With a natural disaster with such nefarious results, I believe that is up to the supplier to make his own decision when deciding if he should price gouge or not. Ethically, one would think that price gouging is ridiculous after Hurricane Sandy, but some believe that price gouging is the way to go. Price gouging is a natural part of capitalism, but under certain circumstances, like natural disasters, price gouging should be up to the supplier to decide.
Thomas G.
Response to Question 1: The strongest argument in favor of price-gouging is that its one of the factors for a capitalistic society. When the price stays the same for a product after a natural disaster, people affected are going to buy a surplus of this product because they can. It's not taking too much money out of their pocket and is making them feel happier about the decision they made because they feel more prepared, which results in long lines and a shortage of that product. If price-gouging is in effect, the higher prices will deter people from buying more of the product than they need. They aren't going to buy more of it, because its a lot of money, therefore, making smarter choices on how to spend their money, which then results to more of that product as well as shorter lines and people getting what they need and are paying for.
Response to Question 2: The strongest argument against price-gouging is that it is morally wrong to boost your prices after a natural disaster. When people are in need of something, businesses shouldn't bump their prices up so that they make more money, especially when people are in distress. Increasing your costs, just hurt your consumer, and give your business a bad name in the community.
Response to Question 3: After reading the articles, I would have never thought that price-gouging would actually help and be necessary for a capitalistic society. I believe that because we live in a free market, businesses should be able to raise prices when they know people are going to need things. There shouldn't be a law against it because this is the society that we live in. However, I didn't realize the fact that it helps in times of natural disaster. By price-gouging, people think more in what they are purchasing and how much of the item they are purchasing, which helps reduce lines because it doesn't attract people to buy the item more excessively. Price-gouging definitely helps in times of natural disaster and is necessary for a capitalistic society.
Andrew K.
Question One: The strongest arguments in favor of price gouging is the fact that the simple laws of supply and demand will facilitate the price of goods. Thus, eliminating the long waits for gas.
Question Two: The strongest argument against price gouging is the fact that it can be considered immoral. If someone needs a product to survive and a company raises the price unfairly, they are hurting that person.
Question Three: Although the practice can be considered immoral, it should be allowed. No matter how much collaboration there might be between companies, there will always be people who charge less. If one station charges 10 dollars a gallon the station across the street will charge less and will continue back and forth until they can't go any lower. Competition will prevent prices from going too high and if there is that much of a shortage, the laws of supply and demand should dictate the price as quantity goes back to normal.
Kelly M.
1. The strongest argument in favor of price gouging is that it is necessary for the economy to balance by itself again. By price gouging, businesses and people will be able to regulate prices depending on the scarcity of the resources. Businesses will be able to benefit by continuing to accumulate wealth in order to help themselves (because they are also victims of the storm), and making conditions for the consumer more efficient (shortening lines, allowing people to focus on their real necessities, etc.).
2. The strongest argument against price gouging is that everyone is at a loss after the storm and raising prices would hurt the consumers because they are starting to rebuild their lives all over again. It is morally wrong for businesses to try to use the state of emergency for their own personal gain at the loss of their buyers. Since everyone is at a loss after the storm, it is important to band together as a force to rebuild our entire community again through relief efforts, this including businesses taking into account the state of the community rather than the individual.
3. I believe that price gouging not essential to bringing the entire community of victims back to a state of normalcy. Buyers and sellers are at the mercy of each other so it is important to consider the needs of one another during a crisis. Price-gouging is immoral on the level of consumers and there are other ways of resolving the supply and demand issue. If businesses ration gas for everyone it will also encourage people to conserve similar to how price gouging encourages reluctant people to wait to fill up their gas tanks and if they only fill up a certain amount of gas, they will be able to shorten lines. Many victims have thousands of dollars of damage and it places a high level of stress on them to even consider gas in order to escape their inhabitable houses. Denying them the privilege of escaping through monetary means is unfair because income levels are and always will be different. Price gouging encourages people with a higher income level to receive gas and those who are in dire need of it because of the storm will not be able to buy it because of the money issue. Price-gouging is unfair and there are other ways of bringing the demand back down without gouging prices to an excessive amount.
Kristina W.
1. I believe that the strongest argument to allow price gauging is the one made by Art Carden. In the third paragraph of his price gauging ‘summary,’ he makes the point that price gauging shows others who weren’t directly effected by a natural disaster, for example, that they need to consume resources more carefully. I feel this is the strongest argument because in a free market economy, business are aloud to fluctuate their prices freely, but what they don’t realize is that in times of need, they may not need an item as much as they really think. In this situation, where the northeast was effected by hurricane Sandy, other Americans in the mid west, lets say, may take gas for granted. When price gauging is aloud, and prices rise, it will bring attention to the fact that another area of the country needs these recourses much more, and that maybe a someone who ‘needs’ gas can wait a few days before refueling their vehicle. With this, the supply of gas will then be able to increase, and citizens in need will be able to attain supplies more easily.
2.The strongest argument against price gouging is that it is simply and morally, wrong. This puts the poorest members of society in a situation where they will not have access to certain items which may be essential to survival after a super storm such as Sandy. In times of need, those against price gouging feel that the price of these goods should be set at a price where they are accessible to all members of the effected community.
3.Before reading these articles, and having discussions with my parents about the current gas situation, I felt that whoever gauged the prices of gas were horrible people of society. Having that said, my point of view has drastically changed. I feel that price gauging goods and recourses such as gas, are essential in balancing the economy. By drastically increasing the price of gas, gas station owners force consumers to rethink whether they need a product as badly as they originally thought. For instance, let’s say you have a quarter of a tank of gas, and feel the need to refuel. If they prices of gas drastically increase you may double think getting gas. In this situation, the supply of gas will then increase, and there will be more for consumers who are in desperate need of this recourse. The consumer may then wait for the time when they absolutely need gas to refuel. Price gauging helps to balance the economy, and will force Americans to not take advantage of a recourse.
Hunter H.
Response to 1: The strongest argument for price gauging it that it is a natural and necessary aspect of free-market capitalism. Basic economics tells us that price ceilings create shortages, and this is seen in extreme situations like the one Long Islanders are currently experiencing. If the market was allowed to run its natural course, prices would increase, but the additional cost of waiting in line would be eliminated. This cost in time is much more of an annoyance than an additional but brief monetary cost that may arise if gauging was permitted. Also, suppliers would respond to incentives and increase the supply if gauging was allowed. While prices may initially be high, a decreased demand due to high prices would allow the market to stabilize and eventually drive prices down after the regular supply has been replenished, therefore naturally eliminating the shortage.
Response to 2: The strongest argument against price gauging is that, or course, it is an immoral exploitation of consumers and people in desperate and adverse situations. While some may charge higher (but reasonable) prices after natural disasters like Hurricane Sandy if gauging was permitted, other business owners may become greedy and change excessively high prices that are way beyond reasonable, knowing that desperate people would grudgingly pay them. Gauging would allow greed to triumph while society or a community faces tribulation.
Response to 3: I believe gauging should be permitted and encouraged but to an extent. Gauging could be limited simply by raising the price ceiling—the closer to equilibrium that the price is the better. If the price ceiling was at say $8 or $9 instead of closer to the current prices, gauging could be controlled while still allowing the market to naturally fluctuate. Gauging would directly cause an increased supply and eliminate the mile-long gas lines that we are currently seeing, therefore ending the shortage quickly. Although the additional financial cost may be difficult for some, it would alleviate many of the stresses Long Islanders are currently experiencing as a result of this gas crisis. By “cracking down” on price gaugers for the benefit of a positive public perception, politicians are essentially hindering the economic markets and delaying an end to the shortages. If prices were allowed to rise to an abnormally high rate to eliminate the shortage, they wouldn’t remain high for very long because of economic competition and basic supply and demand. With decreased demand associated with high prices, businesses would eventually have to drive down prices until things returned to normal. A higher price ceiling would allow this to occur while still preventing excessive greed. Thus, gauging is only a small financial cost for naturally and quickly eliminating a shortage; this is much more desirable than a seemingly endless and aggravating shortage caused by governmentally controlled prices.
Ellie C.
Response to 1: The strongest argument favoring price gouging is that it helps to make sure the people who really need a product are getting it. When the laws of supply and demand take over and gas prices, for example, rise, lines will be cut down and people who actually need gas, not just those who are topping off their tanks, will be able to get it. This would also pressure people to conserve their resources.
Response to 2: The strongest argument against price gouging is that it is immoral. Greedy businesses take advantage of customers because they know if they really need the product they will buy it. But the truth is not everyone can cough up the money, and before long it’s hurting the community.
Response to 3: During normal circumstances, when there isn’t the threat of a natural disaster, I think price gouging is a required part of capitalism. If one business sets high prices, then the consumer can just go somewhere else. However, when there’s a natural disaster and you have massive shortages, then the consumer can’t go anywhere else and are forced to pay high prices. But the problem is not everyone can pay those high prices, so during certain circumstances, like a natural disaster, price gouging is unnecessary.
John V.
1. Price gouging is most strongly supported by the laws of supply and demand. The storm destroyed hundreds of homes, displaced thousands of people, and disrupted many utilities (such as electricity and water) and services (like the LIRR and subway systems). In doing these the storm created a huge increase in demand for things like ice, batteries, bottled water, generators, and gasoline. At the same time, the disruption of the flow of goods and services caused a decrease in the supply of such items. The laws of supply and demand show that when supply decreases while demand increases, the price of goods and services must increase to reflect a new equilibrium price. This increase in price is price gouging.
Many politicians insist on "cracking down" on price gouging because they believe that it is unfair for those who were affected by the storm. They seek to deal with price gougers by arresting them and essentially setting a price ceiling on goods and services. Creating a price ceiling will cause shortages, exacerbating the damage done by Sandy. This is, economists say, the cause of the infamous gas lines that plague dozens of Long Island gas stations.
2. Price gouging is immoral. Why should people who have no electricity, are freezing at night, and/or had their homes damaged (or maybe even destroyed) have to pay more for the things they need? Price gouging is simply an expression of greed on the capitalists' side. A lot of people who have lost or damaged property in the aftermath of the storm are struggling to recover from their losses. Elevated prices will just make life harder for them by forcing them to set aside more money for necessities instead of recovery. Having money left over from buying necessities is important because it reduces the strain on public resources such as shelters by allowing individuals to provide for themselves instead of having to rely on government aid.
3. Price gouging is a necessary part of any laissez-faire economy. However, the United States has a mixed economy. The government plays a big role in how the economy functions. This being the case, and since we are currently in the aftermath of a major natural disaster, I think that the government should take increased control of the economy and prohibit price gouging. I don't say this simply because it is immoral; afterall, it also aids in the disaster relief and recovery. However, I think that the government is doing it wrong. By arresting price gougers, the government is reducing the supply, making the problems worse. Instead, I think that the government should keep the prices of goods and services low by subsidizing them. This would attract more suppliers to the areas with shortages, and the consumers can take advantage of reduced prices, aiding in the recovery.
Vincent G
Response to question one: The strongest argument in favor of price gouging is that the price gouging is just following the laws of supply and demand. During a time of disaster when the demand for gas increases it is only natural that the price of gas should increase too. What this would do is force the people that don’t need gas to wait a little longer to refill and the people that truly do need gas to be able to get it without waiting on a 4 mile long line for 3 hours.
Response to question two: The strongest argument against price gouging is that it is morally and ethically wrong. During a time of disaster when most people are trying to recover from such a devastating event, to force them to pay more for a good that they need to continue their everyday life just seems evil. Just like Governor Christie said “During emergencies, New Jerseyans should look out for each other, not seek to take advantage of each other.” This is just a classic example of right verse wrong.
Response to question three: I believe that price gouging is a necessary aspect of capitalism. The reason that I believe this is because it follows the law of supply and demand. We live in a capitalist nation and for business owners to want to take advantage of a business opportunity is just part of capitalism. By allowing price gouging this also will only leave the people who truly do need the good, yes they may have to pay more for that good, but if there are less people paying this high price then that means that eventually the supply of the good will increase and the price of it will go back to what it was.
Sara H.
1. The strongest argument for price gouging is that it is the basic principle of a free market. If price gouging laws are not in place, then the market can work on its own. Suppliers will come and be able to set their own prices. There is a fear that if suppliers can set their own prices, even in disasters, that consumer will be exploited. However, this is not true. There will be more incentive for suppliers to supply their service, which will mean there will be more competition, and will result in the lowering of prices as low as the disaster allows.
2. The strongest argument against price gouging is that it is morally wrong. In a time of disaster, it is not right to exploit consumers who are in desperate need of a product or service. Many people will not be able to afford essential goods if there are no price gouging laws.
3. I feel that price gouging is extremely unethical during times of hardship. If price gouging was allowed, then, in times of disaster, businesses would take advantage of people. People who lost their homes, loved ones, or even just their power due to hurricane sandy, have so much to worry about. High gas prices should not be added to this list of worries. The business owners should have integrity and not take advantage of those who are struggling. In a time of disaster, it is not right to exploit consumers who are in desperate need of a product or service.
JoshB
Response to question one:
In the wake of the recent catastrophe, there has been an unprecedented persecution of price gougers. While popular belief ridicules the practice, many renowned economist have recently stepped up to defend it. Possibly their best argument in favor of the price gouging is that price gougers are people too. Just like the consumers, some of them have recently felt the wrath of the hurricane. Therefore they should be allowed to reap the benefits of their products that happened to just skyrocket in value. These economists feel that as supply decreases and demand increases, prices should be allowed to flux as they normally would.
Response to question two:
On the contrary, many consumers view gouging as an unnecessary evil. They feel that they are being taken advantage of by the producer. Their best argument is that price gouging is immoral. In the consumers time of need, they feel as if they are being "reverse looted", as CNBC's John Carney reported. The consumers see in their most desperate hours, owners are increasing the prices of their essential products to unreasonable highs as part of their greedy schemes. The victims of sandy want to put aside the common laws of supply and demand in efforts to help their fellow person.
Response to question three:
As much as many conservatives would love to jump on Adam Smith's back and go on a piggy back ride through their laizze faire society, government intervention to stop price gouging is the right move. It is clearly unethical to charge unfair rates on essentials in clear times of struggle. The only people who actually advocate for the controversial economic device are economists and business owners who don't reap the hardships of the natural disaster The local economy is a cycle, and when price gougers hurt half of the cycle, the consumers, they are only hurting themselves in the long run.
JoshB
Response to question one:
In the wake of the recent catastrophe, there has been an unprecedented persecution of price gougers. While popular belief ridicules the practice, many renowned economist have recently stepped up to defend it. Possibly their best argument in favor of the price gouging is that price gougers are people too. Just like the consumers, some of them have recently felt the wrath of the hurricane. Therefore they should be allowed to reap the benefits of their products that happened to just skyrocket in value. These economists feel that as supply decreases and demand increases, prices should be allowed to flux as they normally would.
Response to question two:
On the contrary, many consumers view gouging as an unnecessary evil. They feel that they are being taken advantage of by the producer. Their best argument is that price gouging is immoral. In the consumers time of need, they feel as if they are being "reverse looted", as CNBC's John Carney reported. The consumers see in their most desperate hours, owners are increasing the prices of their essential products to unreasonable highs as part of their greedy schemes. The victims of sandy want to put aside the common laws of supply and demand in efforts to help their fellow person.
Response to question three:
As much as many conservatives would love to jump on Adam Smith's back and go on a piggy back ride through their laizze faire society, government intervention to stop price gouging is the right move. It is clearly unethical to charge unfair rates on essentials in clear times of struggle. The only people who actually advocate for the controversial economic device are economists and business owners who don't reap the hardships of the natural disaster The local economy is a cycle, and when price gougers hurt half of the cycle, the consumers, they are only hurting themselves in the long run.
Prady M.
Response to question one: The strongest argument in favor of price-gouging is that it allows the market to function as it normally would. The higher prices would attract only those in dire need of gas and repel the people who could maybe wait a little bit longer. It would get rid of the longer lines and eliminate the biggest cost: social cost. While people are saving maybe $10 a gallon, they are waiting for hours which helps neither them nor businesses.
Response to question two: The strongest argument against price gouging is that it is not morally sound. It does not show respect to those affected by the storm. By raising prices it is economically hurting those who are already in a precarious situation because they have to pay for the repairs of their house, car etc. Price gouging is kind of kicking the consumer while they are down.
Response to question three: I encourage price gouging and feel it is a necessary aspect of capitalism. I feel that if people are willing to pay the exorbitant prices than the prices really are not exorbitant. Price gouging will drive away the consumers who really do not need the product at that minute and will encourage more suppliers because they see a chance for profit. Also the biggest benefit of price gouging is the prevention of social waste. Waiting on gas lines for 3-4 hours as some people have done in the aftermath of Sandy is useless and does no good. That time can be used in much more productive ways like working to earn money or even shopping to spend money to stimulate the economy of the affected area.
Colodero C. (as if my first name couldn't be anymore identifying)
1. Without a doubt, the strongest argument in favor of price gouging illustrates one of the first theories we discussed thus far in economics – the fact that it simply follows the laws of supply and demand. During times of natural disaster, gas, for example, happens to increase in demand, but decrease in supply Thus, it would seem to be common sense that gas stations would strike up their gas prices; furthermore, this is ultimately an instance of price gouging. Moreover, price gouging is necessary for a well-rounded economy.
2. The strongest argument against price gouging happens to stand within the immoral values towards consumers that are executed in the process of driving prices through the roof for high demanded products and services. With gas being almost completely inelastic, consumers will pay just about anything in times of disaster and catastrophe. So, if gas prices were raised, it would seem completely immoral and unethical to sell at much higher prices when people are in desperate need.
3. I feel as though price gouging should be completely legal in our capitalistic society, but to a degree. Price gouging not only depicts the very laws of supply and demand, but price gouging also portrays another simple economics-related phrase – “time is money.” It is more important for a consumer to focus their time and energy towards making money rather than wasting valuable time waiting to purchase a product or service. To fully represent this theory it’s necessary to evaluate the circumstances Long Islanders are currently under. After the recent natural disaster, the demand for gas has increased tremendously; however, the supply of gas has decreased. This, in turn, has created a strong incentive for some gas stations to take full advantage of this by selling gas at higher prices than that of other local gas stations. As a result, consumers will have the opportunity to buy gas at higher prices rather than having to wait in excessively long lines at gas stations. Although I think price gouging should be legal, it should also be somewhat contained. In my opinion, gas stations should be able to raise their prices of gas, and price ceilings should be raised a bit as well. With a price gouging and higher price ceilings, the long lines at gas stations we have been witnessing will be cut much shorter.
Victoria L.
1.
As I’m sure most of us have seen, especially with the new license plate method of distributing gas, there is a large portion of car owners who purchase gas in bulk ‘just in case’. In this example, if stations were permitted to raise the prices that they sell at, it’s likely that these drivers would wait or conserve what they have. Letting businesses raise prices if they see fit creates an incentive to conserve. In an aftermath of a disaster, demand for goods like water, gasoline, and flashlights increases. Higher prices bring more suppliers in from the outside, as well as keep local businesses from shutting down. This creates higher supply to deal with the increased demand. Competition would bring prices down as low as the disaster allows.
2.
The economics behind price gouging make sense. However, in times of disaster with many people suffering, it cannot be morally right. Theoretically, price gouging would reduce shortage. However, it’s quite likely that many people could not afford gas at a higher price, and therefore would be left in desperation with no transportation while businesses make large profits.
3.
Around New York, about 28% of gas stations are closed due to the fact that they’re out of gas to sell. This is most likely due to the fact that prices are kept the same as they were before the hurricane hit. Many consumers choose to buy gas in bulk after this disaster ‘just in case’, which makes it impossible to keep up with demand. Raising prices accordingly causes the incentive for people to only buy what they need, which ensures a stable supply for the times when we do actually need it. Price gouging shouldn’t be allowed at all times however, but rather only at times of disaster when it is necessary to stabilize the supply and demand of the disaster area.
1. The strongest argument for price-gouging is that it is simply the law of supply and demand at work. If gas stations were allowed to drive up their prices, then less people would want to buy gas. The effect of this is gas stations will have a larger supply, but because demand has decreased, stations would have to lower their prices to attract more customers.
2. The strongest argument against price-gouging is it is immoral, especially in times of crisis. For example, the aftermath of hurricane sandy has left many homes destroyed, many people without power, and many people disheveled, with nothing. People against price-gouging are baffled at how others in these situations would be expected to pay higher than normal prices for resources they desperately need. Also, price-gouging diminishes the efforts of relief organizations.
3. Price-gouging is a needed aspect in capitalism. It creates competition, incentive, and supports the self-governing rule of supply and demand. Under normal circumstances, price-gouging should be encouraged. Under crisis circumstances, I would still recommend it, only I believe there should be some sort of cap. This cap should still allow businesses to raise their prices enough to make a profit, but not enough to become completely unattainable for those who need it. It would stop people from hording gas because the prices would discourage them. It would shorten lines because of, again, discouraging prices. Now with an increased supply and shorter lines, people who truly need it would be able to get it, and with a cap, will be protected from complete exploitation.
1. The strongest argument in favor of price gouging is that, since it is a natural part of the economy, it will cause the problems that caused the price gouging to fix themselves. A natural disaster is a perfect example of a problem that causes price gouging. A natural disaster causes increased demand for things such as batteries and gasoline, because people have greater need for these things during a natural disaster than they usually do, and also causes decreased supply of these same things, because it is harder to ship them into the disaster zone than it would be to ship them elsewhere, and because the products that were already in the disaster zone were either destroyed in the disaster or bought out by the consumers with increased demand for the products. An increase in price is a natural effect of increased demand and decreased supply, according to the laws of economics. Therefore, price gouging is a natural effect of any natural disaster. When the prices of goods, such as gasoline, are gouged, less people will buy the goods to avoid paying the higher price for them. This will decrease the demand for these goods and allow people who really need them to buy them. The supply of the goods will also increase because sellers from outside of the disaster zone will rush into the disaster zone to make a profit by selling their goods at the increased prices. Therefore, price gouging will cause decreased demand and increased supply of the goods with gouged prices, and the prices, in turn will return to normal, according to the laws of economics.
2. The strongest argument against price gouging is that it is immoral and hurts consumers. It is immoral, especially during a natural disaster, because people are already hurting from the natural disaster, and they get hurt even more by price gouging, which causes them to have to pay more than usual for things that they really need. When businesses gouge prices, they are, to some extent, exploiting consumers who are already hurt, and taking advantage of them in their time of need.
3. I believe price gouging is a natural aspect of capitalism that should be encouraged. Although it is immoral and hurts consumers to some extent, it is necessary that prices be gouged in order for an area to recover from a natural disaster as quickly as possible. Natural disasters will always hurt people, whether or not there is price gouging. Since price gouging is a natural effect of a natural disaster, it will hurt consumers. However, we have just about the same ability to fight price gouging as we do to fight any other effects of a natural disaster. Setting price ceilings does not stop the negative effects of price gouging; it only changes their form and causes the entire problem to last longer. Instead of having to pay more for price-gouged goods, consumers have to wait on hour-long lines for these goods. And, the problem lasts longer if price ceilings are in place because there is nothing to cause demand to decrease or supply to increase. Therefore, the shortage will last much longer with price ceilings than without them. If price ceilings are eliminated, the shortage will end quickly because demand will decrease and supply will increase (discussed in question 1). Therefore, I believe price gouging should not be prevented because it is a natural aspect of the economy and is necessary to end a shortage quickly.
Jimmy B.
1. The strongest argument in favor of price gouging is that, since it is a natural part of the economy, it will cause the problems that caused the price gouging to fix themselves. A natural disaster is a perfect example of a problem that causes price gouging. A natural disaster causes increased demand for things such as batteries and gasoline, because people have greater need for these things during a natural disaster than they usually do, and also causes decreased supply of these same things, because it is harder to ship them into the disaster zone than it would be to ship them elsewhere, and because the products that were already in the disaster zone were either destroyed in the disaster or bought out by the consumers with increased demand for the products. An increase in price is a natural effect of increased demand and decreased supply, according to the laws of economics. Therefore, price gouging is a natural effect of any natural disaster. When the prices of goods, such as gasoline, are gouged, less people will buy the goods to avoid paying the higher price for them. This will decrease the demand for these goods and allow people who really need them to buy them. The supply of the goods will also increase because sellers from outside of the disaster zone will rush into the disaster zone to make a profit by selling their goods at the increased prices. Therefore, price gouging will cause decreased demand and increased supply of the goods with gouged prices, and the prices, in turn will return to normal, according to the laws of economics.
2. The strongest argument against price gouging is that it is immoral and hurts consumers. It is immoral, especially during a natural disaster, because people are already hurting from the natural disaster, and they get hurt even more by price gouging, which causes them to have to pay more than usual for things that they really need. When businesses gouge prices, they are, to some extent, exploiting consumers who are already hurt, and taking advantage of them in their time of need.
3. I believe price gouging is a natural aspect of capitalism that should be encouraged. Although it is immoral and hurts consumers to some extent, it is necessary that prices be gouged in order for an area to recover from a natural disaster as quickly as possible. Natural disasters will always hurt people, whether or not there is price gouging. Since price gouging is a natural effect of a natural disaster, it will hurt consumers. However, we have just about the same ability to fight price gouging as we do to fight any other effects of a natural disaster. Setting price ceilings does not stop the negative effects of price gouging; it only changes their form and causes the entire problem to last longer. Instead of having to pay more for price-gouged goods, consumers have to wait on hour-long lines for these goods. And, the problem lasts longer if price ceilings are in place because there is nothing to cause demand to decrease or supply to increase. Therefore, the shortage will last much longer with price ceilings than without them. If price ceilings are eliminated, the shortage will end quickly because demand will decrease and supply will increase (discussed in question 1). Therefore, I believe price gouging should not be prevented because it is a natural aspect of the economy and is necessary to end a shortage quickly.
Elizabeth R.
1. The strongest argument for price gouging is the idea that it is just a natural cycle of the free market. The so called price gauging is really just a product of the supply and demand curve. Since the demand is so high, the suppliers naturally want to raise the prices- but are unable to because the government has fixed the curve to stop price-gouging. This in turn causes shortages and is one of the main reasons that the line is so long. If the prices are allowed to increase in response to the increased demand, then the supply would also increase and eventually the price would fall back down in accordance to the supply and demand curve.
2. The strongest argument against price gouging is that it is morally wrong. By allowing price gouging, business would essentially be allowed to take advantage of desperate consumers. It would benefit the businesses by letting them take advantage of people in bad circumstances in order to make a profit for themselves.
3. In my opinion, although I understand that it is just the natural process of the supply and demand curve, I believe that price gouging is wrong. I do not believe that it is morally right for companies to exploit people, who are already in a bad situation and in a time of economic hardship, by forcing them to pay higher prices.
Ashley P
1) The strongest argument in favor of price gouging is that price gouging allows the market to regulate itself without government interference. With a decrease in supply and an increase in demand, price gouging allows the equilibrium price to naturally rise. Furthermore, price gouging, in this case, eliminates the byproduct of longer lines and customer frustration.
2) The strongest argument against price gouging is that it is morally wrong. In this specific case, price gouging exploits consumers and allows companies to take advantage of their misfortune by issuing price hikes on an item that is desperately needed in everyday life.
3) Although price gouging is a natural process in a capitalistic society, I believe in times of devastation price gouging is not ethical to enforce. By allowing price gouging on gasoline, the public would be hurt rather than helped. If gas stations raise their gas prices, the public would not be able to afford to purchase gas which would cause a halt in the progression of the economy since people would not have the means to go to work or go to stores for both recreational spending. Furthermore, in the aftermath of Sandy, price gouging gasoline would only extend the recovery process.
Lauren H.
1. Price gouging’s strongest argument is that those who “gouge” prices are the ones that supply people during time of demand. If prices are high, only those who are really in need of gas will buy, reducing those crazy lines we see at gas stations, and in turn, eventually lowering the price. This allows the market to work well and normal. Shortages aren’t going to help anyone in the long run.
2. Those against price gouging focus more on the ethical aspects of the issue and view price-gouges as morally unsound, hurting those who are already struggling due to a crisis. It’s hard to rationalize the advantages these businesses have during difficult times and see gouging as anything but greedy and unreasonable.
3. Overall, I think price gouging seems like a better option than the chaos of shortages. Even though it can be argued that the gouging is immoral, I think it’s better to have a normally functioning market during times of crisis. This system also weeds out those who don’t really have crucial need and there will be a greater incentive for suppliers to supply their products. Many gas stations now are out of gas. How is that helping anybody? Perhaps the motives behind price gouging are questionable (and they aren’t always), but the results are beneficial to most everybody.
Kristal S.
Response to Question One: The strongest argument in favor of price gouging is that it is a form of regulation in the free market economy. It abides to the law of supply and demand; without price gouging, consumers hoard supplies and create shortages, and sellers lack the proper incentive to go the extra mile to provide more for the market. When the free market is allowed to function naturally, price gouging will occur. In the process, consumers are encouraged to buy as much as they need and to use products carefully rather than wastefully, resulting in far fewer shortages. Sellers are provided with the necessary incentive to put more out into the market rather than just close up shop. Eventually, competition will occur, resulting in the lowering of prices so that products are more affordable.
Response to Question Two: The strongest argument against price gouging is that it is morally and ethically wrong to exploit the desperate after they have been hit with a natural disaster. It's utterly inappropriate for gougers to come out and prey on consumers after lives were lost and homes were destroyed. Victims have far more pressing matters to tend to, and the additional stress of affordability of necessities adds to an already present collection of worries. They should be allowed to focus on repairing all the damage that was done rather than having their thoughts redirected to how to spend money in the least costly way possible. Their suffering should not be an opportunity for greedy businesses to profit and make money.
Response to Question Three: Price gouging is a practice in capitalism that has its positive uses, but it is not absolutely necessary, nor should it be encouraged. The argument that seemed to pop up most often for those who support price gouging was that it would reduce shortages and the mayhem that takes place when people are scrambling around, trying to store up as much of a limited supply as possible. However, there are alternatives to reduce shortages. Rather than raising prices to ridiculously high amounts, a cap can be placed on how much of a product each consumer can purchase, and that is just one among many possible solutions. It's unfair to force those who absolutely need a certain product to to pay more just because it's high in demand, and it may not fit into everyone's budget. The other issue is that it's a violation of proper morals and ethics to exploit the desperate. Morals and ethics are vague terms, but in today's society, selfish businessmen should not be given permission to take advantage of victims in order to make a quick buck. The peace and orderliness that exists in society functions on a moral basis, and no one should be given the message that it's okay to throw morals to the wind in exchange for temporary satisfaction of greed.
Brian Dugan
Response to Question One: The strongest argument for price gouging is made by people who believe in Laissez-faire capitalism. Laissez-faire capitalism is a type of capitalism that has no government interference. They believe that suppliers should have the right to raise prices, even though they might be extremely unfair to the consumer, because of the effects of supply and demand.
Response to Question Two: The strongest argument against price gouging is that it is unfair to consumers. For example, Hurricane Sandy left people scrambling for gas for their generators and cars. I was forced to pay $4.50, about 50-60 cents more than I would have before the storm. Consumers argue that the greed of the suppliers will force the unregulated prices of the product, in this case, gas, to be way too much and cause economic hardship on consumers.
Response to Question Three: I believe that price gouging is bad for the economy. If price gouging was to happen all the time it would affect other parts of the economy. For example, if all gas prices simply stayed that high because of the greed of the gas station owners, consumers would have to cut back spending in other areas of their life. Home repairs, vacation plans and the ability to go out to dinner would become too expensive because of the cost of gas, thus affecting other people and businesses because of the greed of a select few.
Catherine F.
1. Price gouging supports a capitalist economy by allowing for suppliers and demanders to reach equilibrium price of a good. The high price brings more suppliers into the market, as there is a visible profit to be made from the sale of the product. Suppliers then compete for buyers, each wanting to sell the largest quantity of the product for the highest price. The buyers with the most money to spend are able to purchase the product at its high price. However, many other buyers will be unable to purchase the product or unwilling to make the sacrifices necessary to purchase the product. To lure these prospective buyers, a supplier will lower his price and therefore sell more of his product. Competition will ensue between suppliers until the price is lowered to one that satisfies buyers and suppliers; the equilibrium price. This way, there is neither surplus nor shortage of the product.
2. Price gouging is a morally unethical practice that hurts those in need. Suppliers know how valuable their product is and therefore raise the price of it to be higher than normal. Many buyers are then unable to purchase the product or have to make large monetary or other types of sacrifices in order to buy the necessity. The buyers with the most money or time are the ones that survive; survival of the fittest, if you will. This principle should not apply to human beings as it is unethical. Our society’s moral standards show that each and every person should be able to attain what they need to survive. If buyers aren’t able to purchase what they need, the government should prevent suppliers from exploiting them because it is the right thing to do.
3. Though it is morally questionable, price gouging is simply a way to encourage the growth of a market. Though at first buyers might not be able to attain a product, the prices will go down as competition ensues between the growing number of suppliers. There will be more options of where to buy the product as the higher price draws suppliers into a market, also increasing the supply and preventing a shortage. The net result should be a larger quantity and an eventual lower price as competition comes into play, allowing more buyers to attain the product.
Ryan H.
Response to Question One: The strongest argument in favor of price-gouging is that the capitalist, free market is merely being left untouched. The market, being left untouched and unregulated, would support the laws of supply and demand; while making these horrendous mile-long gas lines virtually disappear. For example, if a gas station was allowed to raise its’ prices from its normal rate, drivers looking to “top off” would wait to refill until it became a necessity. This would cut back lines and allow the drivers who are in desperate need of gas to fill up without a tremendous wait in a mile-long line.
Response to Question 2: The strongest argument against price gouging is obviously the immoral effect on consumers. Allowing distributors to increase prices could be an incredibly risky action because of the possibility that they—the distributors—would take advantage of this disaster and charge extremely high prices in turn for a larger profit. Allowing price gouging could also prevent people who may need a certain item from affording it.
Response to Question 3: At first glance, price gouging immediately appears to be morally wrong and devastating to consumers. However, I do believe that price gouging is a necessary aspect of capitalism and should be encouraged. Price gouging allows distributors to raise prices temporarily and cuts down the gas lines by eliminating the “top offers”. I understand that it is a risky decision to allow the distributors the power to control prices, which is why gouging needs to be permitted but regulated. Temporarily raising prices would eliminate the shortage of gasoline, put people in less of a panic state, and allow the market to be left alone. With the laws of supply and demand acting precisely, prices and supply would eventually return to normal.
Ryan D.
Response to Question One: The strongest argument for price-gouging is that this is prices being controlled by the laws of supply and demand. As the price of gas rises, less people are willing to buy as much gas and these people would begin to drive less and conserve gas.
Response to Question Two: The strongest argument opposing price-gouging is that it is morally wrong for businesses to take advantage of its consumers and pricing the poorest members of the community out of the market for essential goods in order for those businesses to make a profit.
Response to Question Three: I personally feel that price-gouging should be encouraged and not discouraged and "cracked down on". Price-gouging causes people to think more carefully about how much gas they are using, therefore causing them to conserve gas and leave more gas to the people who really need it. The price ceilings imposed by our government have created mass shortages. Government needs to allow the prices to be run by supply and demand.
Matthew O
Response to Question one: The strongest argument in favor of price gouging is that price gouging follows the basic laws of supply and demand. That price gouging is just a part of the free market.
Response to Question two:The strongest argument against price gouging is that price gouging can harm consumers when they are most vulnerable. Price gouging is a way for business to exploit people and grown their wealth.
Response to Question three:Price gouging is a necessary aspect of capitalism because it is simply regulated by the principles of supply and demand. However depending upon the circumastances I believe it to be immoral and unjust because it truly can hurt consumers when they are in a desperate situation. For example if a pizza place decided to charge $6 for a slice of pizza following the events of hurricane sandy they would be exploiting people during a difficult situation thus doing more harm then good.
Bryan W.
1)The strongest argument in favor of price gouging is that prices are controlled by supply and demand. According to supply and demand curves, if the supply increases as well as the demand, price is also going to increase. If the price of gas goes up, people will avoid unnecessary trips to the gas station, causing shortage to be avoided, as well as creating shorter lines. Price gouging allows for a free market to stabilize itself.
2) The strongest argument against price gouging is that it is morally wrong. Price gouging takes advantage of customers during their most vulnerable times. Price gouging allows for greedy businesses to exploit consumers needs in order to obtain more money. It also takes away these necessities from those who can't afford them.
3) I believe that price gouging is a necessary part of capitalism. Contrary to popular belief, I believe that price gougers provide more benefit than they do harm. In a time of crisis, price gouging is necessary to stabilize the free market. In a free market, businesses should be able to raise the prices of their products. If a price ceiling is put into action, shortage follows. Price gouging allows for business to avoid these shortages as well as help these areas of crisis to recover. Setting a price ceiling just prolongs the crisis rather than fixing the problem. Therefore, I believe price gouging is necessary for a capitalist economy and should not be eliminated.
Thomas M.
1. The Strongest argument for price gauging is the prevention of shortages. In theory, allowing prices to fluctuate will prevent all shortages. Prices will raise until either customers determine the benefit is not worth the cost, or more suppliers enter the market due to the high profits that can be made.
2. The Strongest argument against price gauging is the moral aspect of preventing low income consumers from acquiring essential goods. During times of emergency, everyone should have an equal opportunity to get the goods they need to survive. When prices are raised, you cut off supplies from individuals that do not have the money to buy them.
3. I believe price gauging is a necessary aspect of capitalism. Shortages that could be otherwise prevented, occur because of laws against price gauging. Using Sandy as an example, many consumers were buying gas even if they didn't have a pressing need for it. This is because prices hardly changed at all. These people, combined with other consumers who desperately needed gas for essentials such as running a generator for warmth or transport to find food or shelter, created the huge lines we all encountered. This increase in demand was not met with an increase in supply for multiple reasons. First of all, the hurricane caused the docks to close for a few days. This does not explain the weeks of lines, however. The combination of short supplies and damage from the hurricane made it expensive for gas stations to open up. Being unable to raise prices, most owners found opening up not worth their time. Situations like this would be solved simply by allowing price gauging. Additionally, many consumers would reevaluate their need for gas. Many consumers would not line up if the price was raised.
William B.
Question I.
In my opinion the strongest argument in favor of price gouging is found in the economics of situations that lead to price gouging. Take the recent Hurricane we received as an example. Sandy created a speculative need of petrol, flashlights, batteries, and generators. Now, the government has controls to prevent its citizens from being subjected to harsh prices, however, this does not allow the invisible hand of the market to operate properly. Instead of letting the prices of (in some cases life saving) goods and services increase, the government messes with the natural system of supply and demand, and as a result possibly hurts the system even more. If price gouging was to occur, arguably it would only permit those who viewed the goods or services as inelastic to purchase them. At the same time it would deter those buying petrol, for instance, for speculation sake. This would hurt those in need, but many economists like Krugman argue that this would have a leveling effect, ultimately solving the high price, while ensure that those in real need (assuming they can afford inflated prices) get what they need.
Question II.
This is pretty obvious, and as made by many others, the strongest argument against price gouging is ethical. It is simply not ethical to allow businesses to charge people in dire need of certain (again in some cases life saving) goods and services, super inflated fees, especially because of a mere natural disaster. To think that gas station owners and other business owners would do this, especially to people who pay already high, fluctuating prices, is pretty sad. However, even with price controls, I still found myself paying $4 a gallon not the $3.73 I was used to. It is very easy to make an ad hominem argument out of this, especially one extolling the quixotic virtues of the government saving struggling families, therefore it is the best argument against price gouging.
Question III.
While I would like to argue that there is a leveling effect of price gouging, and that I think that it would ultimately deliver goods and services to those who really needed them, not just those caught up in speculatory trends, this would no doubt be unpopular with my classmates, and open me to various responses. In addition it is almost 12 so I want to get this done. So this being said, I’ll be safe and say that we should not allow price gouging to occur, for two reasons. Okay maybe three. One, it is unethical for business. Two, exit polls showed that more than 50% of voters thought that the government should have a bigger role in peoples lives, this adds to the argument that the government should “reign in businesses” and do more to protect citizens from being abused. Three, while it might cut back on people buying things out of shock and frenzy, for those that really need these products and services, who can’t afford it, higher prices could have fatal impacts.
Matthew P
The strongest argument for price gouging is that the lines for the scarce resource would shorten as only the people who have enough money to afford the resource will be able to buy it. Therefore, the people with the most need for the item will be able to receive it, rather than consumers just buying the product out of fear.
The strongest argument against price gouging is that it is considered to be immoral and against ethics. Customers are taken advantage of by businesses because they know consumers need the resource and will buy it, even at an outrageous price.
I believe price gouging is a necessary part of capitalism and should be left alone by the government. The negative effects of price gouging are not significant enough for any sort of government intervention. Plus if a business is price gouging on a certain resource at a time when they know people need it most, and no one is buying that product at that high price, then the businesses will respond by lowering their prices to a reasonable amount, where people feel comfortable buying that item at that particular time for that cost; businesses rather have a profit, than no profit at all. Therefore, businesses and consumers both benefit from price gouging.
Matthew L.
Response to Question One: The strongest argument in favor of price gouging is that price gouging is simply the laws of supply and demand working as they should. In a capitalistic society price gouging is just part of the free market. When markets work as they are supposed to then shortages disappear. People won’t go buy items at higher prices they don’t essentially need, so only people that essentially need these items will buy them and the items will be there for them to buy.
Response to Question Two: The strongest argument against price gouging is that price gouging is seen as morally wrong. It is morally wrong to make people pay higher prices after the horrible situations those people had to live through. It is wrong that sellers get to make high profits from consumers desperate to get essential necessaries. And it is wrong to make these desperate consumers, which might have to worry about so much after the destruction done to them, also have to worry about spending more money on the necessaries they need to live. It just makes the situation these people are in even worse.
Response to Question Three: I think that price gouging is a necessary part of capitalism that should be encouraged. Before I read those articles I would have thought that it was morally wrong but now I see that it really helps. Price gouging helps get rid of shortages which become a real problem after a disaster. Like with gas, most drivers will get gas even if they have enough at the moment. If prices could rise then these drivers would wait and drivers that need gas at the moment could get some. Price gouging makes people think about what they are buying every time they buy it. So it helps reduce lines and shortages because if people don’t need the item then they won’t want to go buy it at a higher price. Price gouging is a necessary part of capitalism and helps in times of disasters.
Catherine Donaghy
Response to question one: The basic argument in favor of price-gouging is that the economic system is playing out the exact way it should after a natural disaster. It is natural for the price to fluctuate based on the supply and demand curve. Also, people are willing to pay more money for something when they desperately need it so, it should not be illegal or immoral for people to pay a price to something that they are willing to pay for anyway.
Response to question two: The main argument against price-gouging is basically that people feel it is unethical and wrong. They people that it is disrespectful to buyers because these people are in a crisis and sellers are taking advantage of the disparity by increasing prices. Advocates against price-gouging also say that sellers are taking out the poorer people from their market because they are unable to purchase the things that they also need due to the excessively high prices.
Response to question three: In my opinion, price-gouging is a necessary part of capitalism and is not unethical or morally wrong. I feel it is wrong to restrict companies from increasing prices when that is what must be done when demand increases after events such as natural disasters. When prices are controlled you end up with mile long lines and many times there is not even enough because it is accessible to everyone. I feel that it is better to let the invisible hand work and the economic system will work itself out. People who believe price-gouging is wrong only take into account the customers but they don’t understand that this is how a business is run especially in a capitalistic society. I don’t understand why it should be illegal to charge a certain price for something if the consumer would be willing to pay that price anyway because it is a necessity.
1. Price gouging is supported by many people because it is a completely free market idea. Supply and demand determines the price of a good or service, not the government. This will also get rid of shortages.
2. The argument against price gouging is that it is immoral. Those against price gouging believe that taking advantage of people is wrong.
3. I believe that price gouging is immoral after a disaster such as Hurricane Sandy. People are in a great state of need after such an incident and should not have to pay an absurd amount of money for a good or service. In a normal situation, price gouging is a necessary aspect of capitalism because it forces people to decide what they really need. Price gouging is an aspect of the free market.
Taryn D.
1. The strongest argument in favor of price-gouging is that it is controlled by supply and demand, and a price ceiling, such as a law that prohibits price-gouging, causes a shortage. In the event of an emergency, price-gouging allows for a faster recovery.
2. The strongest argument against price-gouging is that it is immoral. As a result of price-gouging, some consumers are unable to purchase necessary products and services. Prohibiting price gauging prevents businesses from exploiting consumers.
3. Price-gouging is a necessary part of capitalism. While price-gouging may seem immoral, the price of the product is not changed; how the price is paid changes. With price-gouging, people who do not have the money may not be able to get goods, but without price-gouging, people who do not have the time will not be able to get the necessary products. Being that in each case not everyone will be able to get products, it is best to let the economy regulate itself and allow prices to rise. If price-gouging is permitted during an emergency such as Hurricane Sandy, the situation will take less time to return to normal conditions.
Henry K
1. Supporters of price gouging back their position by saying that the gouged price is merely the market’s new equilibrium price. After Sandy, many goods—gas in particular—saw a sharp increase in demand accompanied by a decrease in supply. Once these changes are displayed on the supply and demand curves, it can be seen that this will drive up the price. By indirectly applying a price ceiling by prohibiting price gouging, the government is initiating these shortages. If the government were to take away this ceiling and allow price gouging, the invisible hand would be allowed to work as usual and eliminate all shortages, barring those caused by a lack of supply alone.
2. The strongest argument provided in opposition to price gouging is that the practice is a moral violation to both those affected by the storm and those who are living on low income. After the storm, many members of our society were in states of disarray and panic. Those in opposition to price gouging state that businesses should not place additional economic strain on these people because they already have enough problems in their plates to deal with. It is also stated that price gouging leads to inequity. One must remember that many of the goods being gouged are still, for the most part, necessary in everyday life. It is argued that doubling or tripling the prices of these goods is unfair to those who simply do not have the funds to afford these higher prices.
3. While unfair to some, price gouging is a necessary evil of our society. While our country is far from being completely capitalistically free, the government should not impose that business stray from the natural fluctuation of prices. While demand spikes drastically in times of disaster, it will never hit the point where it causes goods to become completely elastic. Price will only go as high as people are willing to pay. Increasing the cost will dramatically decrease the shortages seen on many goods such as gas. One article put forth the point that increasing the monetary cost really doesn’t increase the cost one is paying at all. This is due to the opportunity cost of time wasted on gas lines. If someone values there time at ten dollars an hour, then they would technically be paying less if they cut out a two hour line in exchange for paying 15 dollars more for the amount of gas purchased. Another point from the articles which I agreed with the validity of was the “nonworseness claim” made by Zwolinski. The claim states that if it is in the rights of business to shut down during disaster, and that if neglecting someone is worse than gouging them, then it must also be in the rights of business to gouge.
Noelle I.
Response to Question One: The strongest argument in favor of price-gouging is that although harsh on some people's wallets, the law of supply and demand will eventually regulate the market. The supply and demand curve between gas supply and consumer demand will show that if the price increases, many people will not waste their money or time on line to fill up just a third of their tank, and people who are desperate for gas will not be frustrated with long gas lines. Although prices may increase, demand will decrease when people get their gas and eventually the prices will go down again and once again be at equilibrium.
Response to Question Two: After all of the loss after a natural disaster how could gas, of all necessities in this day in age, increase in price? It is morally wrong to charge more money on such a necessary product in our lives while things like food, water, and even shelter are more important to concentrate on during time of devastation. Businesses know that gas is an inelastic good and consumers will need to buy it no matter what price which results in price gouging.
Response to Question Three: I feel that in our capitalistic society it is necessary under certain circumstances for there to be price gouging, however during a natural disaster it only adds to the stress and devastation that people have to deal with. Businesses literally take advantage of consumers in their time of need and owners should not take advantage of people who are desperate for their product. Although there may be longer lines for gas, there are other, cheaper ways to regulate the mass of people. For example, the odd and even license plates tactic. During these natural disasters there are shortages in everything from food to electricity, and obviously gas and there is no way for a consumer to just go to another gas station down the street for cheaper gas because these high prices will be everywhere.
Judy K.
Response to question one: The strongest argument in favor of price gouging is the fact that it is an important element in a capitalistic market. The supply and demand curve demonstrates this aspect of the market. As the demand of an item, say oil for example, increases its price is expected to increase as well. However, if prices are forced to remain fixed, people, even those who are not in desperate need of the oil, would stand in line for it. Therefore, price gouging is necessary in a free market.
Response to question two: The strongest argument against price gouging is that it is immoral. Price gouging doesn’t allow people to purchase what they need, especially in times of natural disasters. And when people do purchase these items, they’re forced to wait in long lines, and pay unimaginably high costs. Businesses gain an unfair advantage over consumers at these times.
Response to question three: Although many would argue that price gouging is just an elemental process of supply and demand, I’m against it. Taking times of natural disasters for example, people are already under a lot of stress. To put more burdens on these people by raising the prices of necessary resources is highly unethical. During these times, businesses much too often take advantage of consumers. They unfairly make high profit off of these consumers who are trying to recover from the many damages that the hurricane brought. Consumers have to deal with property damages, no electricity, and for businesses to take this time as an advantage by price gouging is highly unethical.
Colodero C. responding to Anthony G.
I agree with your first two responses; however, I think you’re a bit mistaken with your answer to the third response. Price gouging may technically be immoral, but as David Futrelle stated in his article for Time Magazine, “In a capitalist society, after all, prices aren’t set according to moral rules or by fiat.” When supply is limited and the demand is high, prices are supposed to rise –this is ultimately “the invisible hand at work.” People wouldn’t “have to pay an absurd amount of money” as you stated. Actually, it’s quite the opposite. If price gouging were legal, it would raise the prices of a good or service and increase supply; thus, giving a consumer a higher incentive to purchase that good or service without having to spend a lot of time waiting in long lines for something like gas. Instead, people will be faced with a harder decision as to whether or not they should spend their time waiting in line and buy something such as gas for cheaper prices, or if they should buy it quicker from price gougers and spend their time doing something ultimately more productive.
Richard R.
In response to question one I believe the strongest argument in favor of price gouging is that if you let it happen shortages in needed goods will decrease. Since there is a greater chance at earning a higher profit more suppliers will emerge to meet the demand of good. Soon competition will also drive the prices down and will act like a free market.
In response to question two the strongest argument is that the law protects us from unfair prices of goods in times of need. Companies will do their best to earn the highest profit possible and would gladly take advantage of consumers who are in need of basic goods by raising the prices. Without this law in place we would find trouble looking for any everyday good such as gas.
In response to question three I believe that price gouging is necessary for our economy. Companies should be able to price goods as they want. Laws against price gouging are simply removing competition from the equation. All the companies will be selling gas at the same price and not many suppliers will be able to offer all the companies more gas because for the price its being bought and sold at its not worth their time. Competition would even help drive the price of gas down which would actually help the american public in the wake of Hurricane Sandy because since they are spending less money they will have more money to pay for things such as house or car repairs. Price gouging is a necessary part of capitalism and can keep itself in check from ridiculously high prices due to competition.
Richard R.
In response to question one I believe the strongest argument in favor of price gouging is that if you let it happen shortages in needed goods will decrease. Since there is a greater chance at earning a higher profit more suppliers will emerge to meet the demand of good. Soon competition will also drive the prices down and will act like a free market.
In response to question two the strongest argument is that the law protects us from unfair prices of goods in times of need. Companies will do their best to earn the highest profit possible and would gladly take advantage of consumers who are in need of basic goods by raising the prices. Without this law in place we would find trouble looking for any everyday good such as gas.
In response to question three I believe that price gouging is necessary for our economy. Companies should be able to price goods as they want. Laws against price gouging are simply removing competition from the equation. All the companies will be selling gas at the same price and not many suppliers will be able to offer all the companies more gas because for the price its being bought and sold at its not worth their time. Competition would even help drive the price of gas down which would actually help the american public in the wake of Hurricane Sandy because since they are spending less money they will have more money to pay for things such as house or car repairs. Price gouging is a necessary part of capitalism and can keep itself in check from ridiculously high prices due to competition.
Richard R. in response to Matt O.
I agree with your response to the first two questions however i believe that you a simply misguided with your third. You are right when you say “Price gouging is a necessary aspect of capitalism because is is regulated by the principles of supply and demand.” However when you talk about the price of a pizza slice being possibly raised to six dollars there is a simple solution. If the price of one slice of pizza was $6 then no one would buy that slice of pizza. People would look to other companies and buy from whoever was selling the pizza at its lowest price. Soon competition would drive the slice of pizza that was $6 down. Price gouging should be allowed because it allows for competition between businesses.
Kayla M.
Question one: I feel that the strongest argument in favor of price gauging would be that it is necessary in order for such standards of living to return to a normalcy. Allowing the prices to increase without a price ceiling will ultimately stabilize the supply and demand curves by motivating suppliers to supply more. The basic laws of supply and demand state that the higher prices will result in more of a supply which in the long run will significantly help to reduce the shortages we are facing and allow people to fill up their tanks, for example, without wasting their time waiting on long lines. Regardless of a price ceiling, people will be forced to spend either more money or more time which in some cases is even more valuable.
Question two: The strongest argument against price gauging would be the idea that it is unethical to do such a thing to consumers in a time of distress. Families who may already be struggling have no way around buying necessary goods such as gas or food and are therefore forced to spend unreasonable amounts of money on products that they previously got for much less. Businesses use these times after disasters to take advantage of consumers and charge them ridiculous amounts in order to benefit themselves.
Question three: I never realized the many benefits that price gauging could have on a society including the consumers. After reading these articles, I now feel that it is an important aspect of capitalism and is very necessary in order to limit the amounts of products that people are purchasing. It causes people to become more conscious of the quantities that they are buying which will help to resolve shortages. Living in a free market means that prices should be determined based on the demand of goods so I feel that there should be no regulations on price gauging. When people need more of things during these times, businesses should be able to increase the prices in order for lines to be reduced and supplies to be increased.
1. The strongest argument for price gouging is that it allows the simple law of supply and demand to be stable. If price gouging was allowed, businesses could set their own prices, without inference of the government’s price ceiling, there wouldn't be a shortage. People would only buy what they need and they would conserve there resources. This would , in the long run, diminish things like long gas lines.
2. The strongest argument against price gouging is that businesses will take advantage of the consumers. In times of need, like after hurricane sandy, people become desperate for the basic necessities, like gas. Businesses hike up their prices because they know people are willing to pay for it. By not allowing price gouging consumers are protected from businesses exploiting them.
3. In my opinion, price gouging should not be encouraged. Not only is it immoral, it hurts the economy and society. By allowing businesses to increase prices no price ceiling they set prices that are insane. Having these high prices will cause consumers to cut back on products or completely stop buying them. If consumers don’t spend money, than these business will fail. Money won’t be circulated around the economy. Price gouging is not necessary aspect of capitalism. Price gouging will do more harm than good. Some people claim that it will end shortages, I agree but not for the same reasons. Shortages will end because people won’t be able to afford to pay the high prices. Price gouging will only help businesses.
1. The strongest argument for price gouging is that it allows the simple law of supply and demand to be stable. If price gouging was allowed, businesses could set their own prices, without inference of the government’s price ceiling, there wouldn’t be a shortage. People would only buy what they need and they would conserve there resources. This would , in the long run, diminish things like long gas lines.
2. The strongest argument against price gouging is that businesses will take advantage of the consumers. In times of need, like after hurricane sandy, people become desperate for the basic necessities, like gas. Businesses hike up their prices because they know people are willing to pay for it. By not allowing price gouging consumers are protected from businesses exploiting them.
3. In my opinion, price gouging should not be encouraged. Not only is it immoral, it hurts the economy and society. By allowing businesses to increase prices no price ceiling they set prices that are insane. Having these high prices will cause consumers to cut back on products or completely stop buying them. If consumers don’t spend money, than these business will fail. Money won’t be circulated around the economy. Price gouging is not necessary aspect of capitalism. Price gouging will do more harm than good. Some people claim that it will end shortages, I agree but not for the same reasons. Shortages will end because people won’t be able to afford to pay the high prices. Price gouging will only help businesses.
Nicholai Mitchko
AP Economics
1. Price gouging is a phenomenon which occurs when supply dwindles and demand increases on a specific good. Vendors increase, or gouge, prices to take advantage of the increased Demand. The good gauged is usually quite inelastic in nature and people will tend to purchase the good at a wide range of prices. However, in times of emergency (i.e. Hurricane Sandy), state governments mandate against price gouging. But, many argue that disposing of these mandates would alleviate the shortages the public experiences. In relation to today, the gas shortage. The argument is that the government should exhibit a free market (lassiez-faire) approach in which price gouging occurs. In that situation, the market would fix itself: keeping prices high would counteract the high demand. Whereas in the government regulated situation, the gas shortage lasts for weeks on end.
2. As for against price gouging, the main argument is that the government has the responsibility to protect the consumers during times of emergency. In this scenario, the government regulates the price in times of emergency. But, it inadvertently causes supply shortages and in the case of gas shortages, long lines and unavailability. Preventing price gauging places a price ceiling over many products, and in almost every situation causes shortages.
3. Price gouging is a necessary aspect of a free market society, where there should be no one to tell vendors what to charge consumers. Price gouging allows supply to catch up with increasing demand, especially in emergency situations such as after a hurricane. If price gouging was not allowed, shortages from a natural disaster or market fluctuation would last for weeks. On another aspect, it is the right, especially in a free market society, for vendors to charge whatever they want.
Kelly M. responding to Matthew B.
I agree that laissez-faire capitalism may seem like the only resolution in regulating the supply and demand issue once again, but I think that reluctant people waiting to fill up their gas tanks may pose as an issue for lines. You said that the gouging of prices will help lines, but it may not aid it at all. Say a person was extremely reluctant to fill up their gas tank, and he waits until the “fuel low” icon is flashing in his car. This said person may barely have enough gas to make it to the gas station, and when he is five cars from the front, the owner of the gas station says there is no gas left, and his car has already run out of gas. What should he do then? When businesses price gouge, they increase the risk of this happening, so lines may not be reduced at all. Instead of the new price-gouged prices catering to those in need of gas, they will cater to those who are better off money-wise. Families that have lost their homes may feel too overwhelmed to even buy gasoline because the prices will be too intimidating. I don’t think that it is right to deny them the right of escaping their uninhabitable home because business feel like they can take advantage of people after a devastating disaster. I think you or anyone in that particular case may feel like a victim of greedy business owners, and won’t be in favor of price-gouging after that situation.
Thomas M responding to Faryn S
I disagree with your opinion on price gauging being an unnecessary part of capitalism. Even if gas prices rose, most consumers would still be able to afford them if need be. Those without an immediate need for gasoline would reconsider getting on the line, decreasing demand. In addition, suppliers of gasoline would have more incentive to move their products into the area, increasing supply. This combination can only prevent shortages, while making sure gasoline goes to the consumers who truly need it to about their daily lives.
Lauren H responding to Ashley P
While I understand that price gouging can be considered morally unsound, I don’t believe that it overall hurts rather than helps the public. If gas stations raise their prices, they’ll do so at the price where those who are in dire need are the only ones who will buy gas, instead of the people who stand in line and only fill up their tanks. That way, the prices will come down in a natural way. Shortages and 4-5 hour lines halt progression more so than higher prices.
Danielle D responding to Lauren H responding to Ashley P
Lauren, I agree with you in that while price gouging seems immoral, it can actually benefit the public. By simply following the laws of supply and demand, price gouging allows those who are in dire need of gas to be able to get it and eliminates shortages. When people are waiting lines for multiple hours in order to get gas, a very valuable resource—time and energy—is simply wasted. In the beginning of the school year, we learned about marginal costs and marginal benefits. Obviously, the costs of standing in line for hours seem to outweigh the benefits, but the public is forced into doing so because they need gas to get to work. They seem to be facing a “Catch-22”— they are in a lose-lose situation. In this time of need, they look to the government to help. Paradoxically, if the government would allow price gouging, their problem would be eliminated and the “invisible hand” would be at work.
Thomas G. responding to Josephine S.
I think we can all agree that price-gouging may seem immoral; however, it should definitely be encouraged. In disastrous times like these, price-gouging helps consumers really think about their purchase decisions. If people go to the gas station when they have three quarters of a tank left, they are helping create these gas shortages as well as make the lines longer. That’s when people get antsy and get extremely upset. If the price is raised, people will think about what they are purchasing and make better, economical decisions that will relieve the symptoms of natural disasters. Also, price-gouging doesn’t happen all the time, it’s just when people are in tough situations and items become necessities and people start panicking. Businesses should have the right to make the prices what they believe is fair or necessary and consumers will be able to chose to use their product or not. Price gouging is necessary for capitalism and it will not only help businesses but also help people affected by disasters, such as hurricanes.
Matthew B. in Response to Peter T.
Peter, there are several flaws in your argument. First of all, you stated that " The gas lines in the after math of Hurricane sandy aren’t because of the lack of price gouging, but rather because of lack of supply while the demand is relatively the same;" actually, demand has increased due to two factors: people need gas for their cars as well as their generators, and people expect there to be a shortage for long periods of time and want to stock up at every chance they get, despite the fact that they really don't need it. The abnormally low supply, with the abnormally high demand, all with fixed prices creates a shortage that would only be avoidable by raising prices, since it would be difficult to change the supply or the demand. Your second flaw is that you are assuming that petrol companies will price gouge to a point where people won't purchase petrol. The businesses still need people to buy the items, they would increase their price to the new equilibrium price, not a price that people wouldn't pay. Therefore, as I previously stated, allowing prices to control themselves without government intervention would benefit both businesses and consumers.
Matthew B. in Response to Kelly M. in response to Matthew B.
Kelly, your response to my response with the person about to run out of petrol and the petrol station runs out right when he is about to refuel his car is flawed for one man reason. It assumes that the person values his time so much that he will only fill up when it is utterly necessary. However, even though this person may only refuel his car when the low fuel icon flashes, in the instance of the aftermath of Hurricane Sandy, these people would be a little more proactive since they are aware that petrol is in low supply. Additionally, you claim that businesses will price-gouge to a point where most people cannot afford their goods, such as petrol. This is wrong; businesses will raise their prices to the new equilibrium point, that is set by the laws of supply and demand. Hence, price-gouging benefits both the consumer, and the businesses.
Hunter H. responding to Peter T.
Pete, I believe there are many flaws in your argument. How can gouging hurt the economy if gauging is actually a natural fluctuation within a market? You also claim that, "In a normal situation, let a gas station gouge its prices." In a normal situation, this in fact would never happen. Gouging is a natural response to a decreased supply of a good. If the supply decreases, and the demand remains stationary or increases, business owners have to raise their prices. Also, the "lack of supply" of gas that you claim is currently hindering the gas market and creating long lines is caused by the ban on price gouging. This ban could be called a price ceiling, and basic economics that price ceilings below the equilibrium price will create shortages, or "lack of supply."
Gouging is simply the expression of true capitalism. Advocates of capitalism should be aware of their subsequent advocacy of price gouging or, at the very least, avoid denouncing it. This truth in and of itself spells the validity of price gouging in the US, not to mention the scores of economists who testify that its mere existence is a good sign for the continuity of American capitalism. Its legitimacy can be discovered during a review of economics 101, specifically supply and demand. Simply stated, in disasters the demand for a necessity product tends to increase while the supply for those products does the opposite. Ask any novice economist and he’ll tell you that anything but a price increase would be unnatural in a world of perfect capitalism. The conclusion (and the best argument for price gouging) can be as simple as the position’s preface; gouging is simply the expression of true capitalism. Any prohibition thereof would interfere with the “autonomous decision making” of our citizens and our capitalist society itself.
Nevertheless, the environment in which gouging for a specific product would occur would be marked by some kind of dramatic increase in interest in that product; namely a “disaster.” It can be assumed that interest would be increased for numerous products, and consumers would be expected to buy more than usual. This increased financial stress is just one factor that gouging critics cite is reason to deem gouging criminal. The previous argument sounds airtight on paper, but the emotional distress exhibited by disaster affected consumers (from new homelessness to just losing personal possessions) paints price gouging as just an awful burden to add to the countless others bared by these people. Therefore it cannot be argued that gouging is unethical, and critics of the phenomenon conclude that it should be illegal as a result.
In order to address this question, the type of capitalism mentioned must be specified; are we dealing with laissez-faire/true capitalism or American capitalism. In American capitalism (which is quite distinct from true capitalism, but that is an argument to be had elsewhere) ethics violations are often criminally prosecuted and laws are enacted to prevent them. There is more of a sympathetic viewpoint of the disaster-stricken than in other, more truly capitalistic societies. Therefore I would not see the inclusion of price gouging in a status-quo American capitalism. But because it is merely an expression of the vital mechanisms of true capitalism, its existence would be vital to the stability thereof.
In Response to Lauren H.
While I agree with your general acceptance of price-gouging as a way to maintain market stability in a crisis, I would be wary of concluding that it is beneficial to those that have “a crucial need,” in fact I would conclude that those who crucially need the product would be the most dramatically hindered; they have to purchase the product no matter the price (the product becomes inelastic) and are left completely at the whim of the suppliers. While gouging may slightly shorten the shortage (and thereby helpful to MOST), I doubt that the critically vulnerable consumers are benefiting at all.
Emma K. (Sorry for the late post, I still do not have internet at my house)
Response to 1: I think that the strongest argument in favor of price gouging is that it reduces the demand for a good and naturally allows the market to return to equilibrium. When prices are significantly increased (price gouging) only the people who desperately need that good will be willing to pay that high prices, this reduces demand for that product. With the after affects of Hurricane Sandy the demand for gasoline has raised dramatically, this has led to long lines. If price gouging was allowed then only the people who really need the gas would be willing to pay for it. Also, price gouging allows for the free market to function. People can sell items and services at a price that the market supports and both sides benefit.
Response to 2: I think the strongest argument against price gouging is because it is ethically wrong. Businesses should not be allowed to take advantage of consumers in times of hardship. When a price ceiling is created consumers are treated fairly and prices are kept at a stable price. Price gouging would only create hardships for many people, especially for lower income families who could be really hurt by drastic increases in price.
Response to 3: I think that in times of serious disaster price gouging is unethical because the people who are most at need, and have the least available resources are most impacted in these times. For example, those who have the lowest income would have the greatest difficulty getting gas, which would make it difficult for them to get to work, and perhaps would cause them to lose their employment, housing, and other necessities. However, price gouging can be good in general because it can naturally return the market price back to equilibrium without intervention. For example, people would avoid taking more of the resource than they need, and people in other areas would see the cost of items, and limit their use to need only.
Overall, I think the free market should stand, especially in a situation like this, which is a short-term problem in the supply. chain.
Danielle R. in response to Elizabeth R.'s post:
Elizabeth, I do agree with you that in some cases price gouging can be ethically wrong and hurt people under economic hardships, but I also believe that's life and price gouging is just a choice. It might be seen wrong to some, but to others it might be a feasible option that they can do- if a supplier wants to price gouge that should be allowed because it's his choice. People who cannot afford it cannot really do anything about except if the gouging is unjust to the fixed prices created by state and/or federal government. I see how you looked at price gouging as something that can be forced upon a person, but in reality, the person is not really being forced at all. The suppliers are not trying to force something upon a person in most cases. They are just trying to make money like everyone else in the world, and the people impacted have the choice to work with the supplier or find another option. I totally agree with you that may seem unfair to people in certain situations, but I also see the other sides of the argument. Price gouging is a strategy used by businesses to make their way in the economy. By having price gouging we allow the supply and demand curve find an equilibrium naturally rather than hurting people even more like we have seen with Hurricane Sandy and gasoline supply. Once again, I do agree with you that on some levels price gouging can be morally wrong to people, but I also believe that there are more aspects that people must look at when evaluating price gouging and its myriad results.
Kristal S. responding to Emily Y.
While I can understand your point, I must say that I disagree with a few points you have made. Consumers may not be directly affected, but in the aftermath of a natural disaster, they tend to have other pressing matters to deal with. Resulting damage needs to be repaired, and victims are likely concerned about loved ones whom they may have trouble getting in contact with. They shouldn't have the increased burden of wondering what goods they can and cannot afford on the limited incomes they make. However, if I were to switch to the point of view of a business owner, then I agree with the point that an increase in prices may help businesses that have suffered, but I believe that if people must resort to such a tactic, then there should be a reasonable limit to how high prices may be raised. In other words, the government should allow companies to raise prices, but not to the point where consumers will be taken advantage of, which frequently occurs when price gouging is left unchecked. As a consumer, this increase in prices, however small, will make me rethink if I really want to purchase the product. Time is also valuable, and long lines will give me additional incentive to buy when deemed absolutely necessary and to use goods carefully. While price gouging is a possible solution to the problems that arise from a limited supply, it is not the only solution.
Judy K. Responding to Brian D.
I strongly agree with you that price gouging is harmful for the economy. Price gouging can create a chain reaction and negatively affect the economy as a whole. Like you mentioned, an immediate rise in gas prices means that consumers would have to eliminate other spending. However, this is not the only reason why price gouging should not be praised. It is simply unethical for businesses to take advantage of people who are struggling. Especially in this case where consumers are struggling to recover from the damages, businesses should not seek to profit off of these people by raising the prices of such an important resource like oil.
Victoria L. responding to Emily Y. (You’ve been Loki’d again)
Actually, just today my mother thanked the economics Gods (of mischief –wink- Inside joke) that most gas stations aren’t resorting to price gouging, so it would most definitely anger the masses as expected. Even though this seems unfair, I agree that this is definitely necessary in times of hardship. I didn’t actually consider the fact that gas stations are frequent places of violence, and this is most definitely true. We’ve all heard the horror stories of large fights while waiting on line for gas. However, you didn’t touch upon the fact that many gas stations are closing entirely because of the lack of supply, which I feel is necessary to mention. The violence and waiting would be alleviated with an increased supply which price gouging could bring.
Robert Kinney
I'm sorry to say this is just an inexcusably late answer to the question.
1. The strongest argument in favor of price gouging is that it creates the proper incentives for consumers and sellers. Sellers want to provide more at a higher price and consumers will use less of a scarce resource.
2. The strongest argument against price gouging is that it denies people that absolutely need a scarce good or service, but cannot afford to pay a higher price.
3. I'll say I believe that price gouging is not necessary and doesn't need to be encouraged. I understand that the cost of gasoline is the same to consumers: they either pay with money, time or some other form of utility. Unfortunately, it seems people have a vast wealth of time when it comes to gas lines, which drives up the time price. However, it is a choice between not supplying gas to people destitute in the time department or people destitute in the money department. I've been told people without money need help, but people without time? I don't see many relief foundations for that cause. The goal of socialist policies is to provide the bare necessities to people, and I can accept the inefficiencies that come with economically unsound thinking during a crises, so long as the people are provided for. I've heard our government did a good job providing needed goods and services, so Hooroar for socialism not being a complete failure in this scenario!
I’m not sure if replying to a reply counts as our reply, so I’m including everything in one post.
Emily Y responding to Victoria L
I forgot to mention in my response that many people are buying gas in bulk as you said, a “just in case” even though this is not entirely necessary, making demand skyrocket. This is a good point to raise because if people only bought what they absolutely needed, perhaps there would have been more gas in supply. However, I do know that people need gas for generators, so this would have also caused the supply to diminish quickly.
Emily Y responding to Victoria L responding to Emily Y
(That Loki’d doesn’t count! I do hope you realize that my revenge is going to be sweet)
I’ve noticed that too, and I found it pretty interesting that gas stations are adhering to the public’s opinion. I’ve also noticed that gas lines have diminished greatly ever since the new law was enacted. (The one where only odd numbered license plates can only get gas on odd days, and vice versa) I thought this was a great solution to the line problem, even if it does frustrate some people, but people should be wary of the amount of gas in their tank anyway. Although I’m not aware of the effect on businesses from this law, it is clear that price gouging was not the answer in this situation, and as you said, it could have angered the masses further.
Emily Y responding to Kristal S
I agree with your various takes from the point of view of a consumer and business owner—it is an especially hard decision to make when one must decide between morals or the betterment of oneself/their business. And I also agree than an amendment should have been made to my argument earlier: a price ceiling should be enacted so that consumers cannot be exploited. Even though America is a capitalistic society, I do believe there is a need for government regulation to keep business practices “fair” and this would be an instance where intervention is needed. To go along with your last statement that price gouging is not the only solution, I also agree with that since price gouging is not appealing to the consumer, so a middle ground must be met. With the new law that I mentioned in my previous post, I believe that this provides a fair solution between the consumer and business. Business, (if they have gas in supply) can regulate their prices and business as normal, and have a steady flow of customers while maintaining a reasonable line.
Peter T. in resposne to Hunter H.
Although price gouging is a natural fluctuation, the government should step in to limit price gouging in an emergency situation like Hurricane Sandy. Although gouging is in response to a decrease in supply, in a natural disaster I personally think it is unethical for local business owners to charge too much to loyal customers. The lack of supply was created when New York harbor was shut down by the US Coast guard, leaving dozens of oil tankers waiting to deliver oil. Certainly a “lack of supply.” Increase the prices and still people will wait on line. If price gouging was allowed to go uncontrolled, many would stay at home instead of going to work and the economy would certainly be hurt.
Kayla M. in response to Ryan H.
I agree with your response to question three and the idea that prior to reading these articles I never would of realized the more good than harm that price gauging can have on our economy. Although this concept may be extremely frightening to many consumers, it should most definitely be encouraged in order to return the basics of society back to the norm such as gas lines and food shortages. These increased prices are only temporary and will really make consumers double think about how much of a product is really necessary to buy at this time and not feel obligated to just “top off” their gas tank when they are already three quarters full. Price gauging will not doubt resolve problems of shortages and is necessary to capitalism.
Elizabeth R. in response to Danielle R 's post:
(I’m responding to someone who responded to me- I hope that still a response to someone)
Although, as you say, price-gauging may be an inevitable part of capitalism- that does not mean that it is necessary nor should it be left unregulated. Your argument for price-gauging is essentially that it would allow the supply and demand curve to reach equilibrium and would help to reduce the shortages that took place after Hurricane Sandy. However, there are other alternatives to help reduce the chaos at the gas lines aside from allowing prices to run rampant. For example, you could create rations of gas, creating a cap on how much each person could take. But allowing price gouging to occur so that select individuals can make a profit by forcing people to pay higher prices for an essential product such as gas just seems unfair. We are also in a time of economic hardships, and to allow price-gouging would mean that gas prices may not fit into everyone’s budget.
Sehar L. Responding to Taryn D.
I disagree with you when you said that price gauging should be permitted as it is “best to let the economy regulate itself” during situations like Hurricane Sandy. If price gauging in allowed you said it will help those who do not have the time to give to wait in lines vs. people who do not have the money, however what I think you failed to realize is that in disasters like Sandy money is a much greater issue people have to face vs. time. During disasters like Sandy people need the money to fix the damage done to their houses, to buy food outside because they can’t cook in their house, pay for a hotel because of the cold or buy a generator. If the prices of these items and items like gas, and emergency supplies (i.e. batteries and flashlights) were increased the consumers would greatly suffer while a few businesses would make a profit. Also, I disagree when supporters of price gouging say that if prices are increased then the consumers will be more careful to what and how much of the items they purchase which would in turn vastly decrease the long lines. Items like gas and generators are vital in times like Sandy and people will need the items no matter what the price so it is just unfair to charge consumers higher prices.
JoshB in response to BryanW:
I disagree that price gouging is a necessary part of capitalism. The market “stabilizing” nearly means that the consumers with more money and less damage can buy products and the victims of the hurricane cannot. This “stabilization” therefore proves disastrous for all the consumers that can now not buy their necessities at a reasonable price. On another note, the shortages that would result from a price ceiling would be short lived. Naturally, when demand shoots up, there are going to be a lot more items sold and more products required. However, as we move past the wake of the hurricane, demand will again start to drop towards its lower levels, just as gas lines have shrunken over the past few days. If the gas stations had raised their prices, many consumers who needed gas wouldn't have been able to buy it because of their tremendous losses from the hurricane. Keeping gas at a lower price, even if you had to wait longer for it, allowed the victims to still drive to work and power their generators.
Bryan W. in response to Josh B.
Although I agree with your response that the practice of price gouging is unethical because it makes life harder in times of struggle, I believe that it is a necessary action that needs to be taken in a time of crisis in order to recover. Raising prices will create smaller lines and reduce the risk of shortage. Government intervention of price gouging is the same thing as creating a price ceiling, which ultimately causes shortages. Remember, the price increase is only temporary, so yes it may hurt the consumers for a short while, but stabilizing the free market helps them more in long run. Therefore, price gouging will help the market recover, and is a necessary part of capitalism.
Mark R. in response to Henry K.
While I agree that, as you said, "price gouging is a necessary evil of our society," I disagree with your statement that the government should not regulate price fluctuations. Even though it is true that people will pay only what they are willing to when prices rise, it is morally wrong for businesses to exploit this temporary desperation for necessities. There also may not be enough time for natural supply and demand and competition to create a stable price shortly after a disaster, allowing gas stations to charge whatever that please, knowing some consumers will be forced to purchase it. Suppliers of such necessities can afford to have only moderate increases in prices to limit shortages and increase quantities supplied while not overly exploiting consumers. However, due to human nature, some businesses may need government intervention to keep them from harmful gouging.
Matthew L. Responding to Sehar L.
I disagree with you when you said that price gouging shouldn't be allowed during times of a disaster because it is unethical and will hurt people already suffering from the disaster. Though it may seem unethical for price gouging to be allowed in times of a disaster, price gouging would help the people that suffered from the disaster. In times of a disaster time becomes very important; people need time to repair the damage that has been done to them as fast as they can so they can get back to their normal lives. Without price gouging, after a disaster there will be shortages on important products. People don’t have the time to wait for these products. It would be better for them to buy it at a higher price than to wait in line for an hour. In that hour they can get one step closer to repairing their lives, or even make up the money. One hour of work could easily pay off the higher prices they paid. But I do agree with the first part of your question three when you said that price gouging lets the invisible hand work and competition will bring the prices back down over time.
Response to Matt LaPlante.
I have mix feeling about price gouging. I see the negatives and the positives and I am very open to my classmates opinions. Matt LaPlante made a good point when he said that price gouging was necessary because it can get rid of shortages- People would only buy what they need and conserve. David M. Brown stated that " both sides gain from the trade". Customers dont have to wait in long lines and there wont be any shortages. Sellers benefit because the higher prices will bring them in a bigger profit. But, what about the people living below the poverty line? Both Matt and David Brown seem to forget about them. With a commodity like gas, the prices are all ready high. If businesses were to raise them after a disaster, like hurricane sandy, whose to say the average person can afford it. Matt claims that it will end shortages but its not because the demand goes down, its because people simply cant afford the higher prices.Price gouging forces people to make a tough decision between their necessities . Food vs. gas, or water vs health care?. I agree that it would end shortages but I don't agree that it is a necessary part of capitalism.
Catherine Donaghy in response to Noelle Ingrisano
I am sorry to say that I disagree with your reasoning as to why price-gouging is unnecessary. You happen to agree with the moral aspect but you fail to account for how businesses are affected by these times of crises. When there is a high demand but a low supply price is supposed to increase so when you put a price ceiling on a product such as gas that is lower than the equilibrium price businesses are taking a loss. How is it fair for sellers to take a loss when consumers would be willing to pay any price for the product that they desperately need? In our capitalistic society price-gouging is a necessary evil to keep order in our economic system. Businesses that price-gouge do not do it to take advantage of people they do it because that is what the new equilibrium price is.
Robert K responding to Matthew L
It is true that lines will be greatly reduced, but the cost of these goods and services will remain the same. Although the time people waste on line is gone, they are spending an amount of money equal to this time. To me, the idea that people will be more careful with their scarce resources seems to be based on the fact that they are valuing their time wrong. It is true that shortages will no longer exist, which is good news to those that spend time waiting on line and do not get served. I see your side of the argument and would be fine if it was implemented. The truth is that both sides have enough benefits with their negatives for me to settle with either one.
Libby O. in response to Emma K.
You state at first that you feel price gouging is unethical during times of disaster, yet go on to say the ”free market should stand, especially in a situation like this, which is a short-term problem in the supply chain.” The problem I have with this is hurricane sandy is going to continue to be a problem if we don’t allow price gouging, and therefore it is ethical because the decrease demand for a high price item will eventually bring it back down. And I know you sided for price gouging, but I don’t understand how you can claim it as unethical, but go on to support it at the end. What I also want to point out is the effects of this hurricane will last a lot longer if price gouging is not allowed and we will have a harder time returning to normal without it.
Brian Dugan in response to Anthony G.
I agree with parts of your response. Price gouging is immoral and can hurt people in times of disaster. However, I disagree with that it is necessary. It may seem necessary to the suppliers of said product. But to the consumers it is not. It can be seen as a form of coercion. By raising prices so high, it forces people to pick and choose between what products they need. In your response, you stated “it forces people to decide what they really need”. If consumers choose the gouged product, it will force chose, as well as force them to cut back spending in other areas. For example, if the gouged product was gas. The frequency of trips to the Movie Theater and going out to dinner would decrease because 99 percent of the time, people travel by car to get to those places. The same goes with vacations. Road trips by car would decrease because of the high price of gas, and the already high cost of airplane tickets would go higher because of the price of gas. At the end of all this it goes back the suppliers morals, is he/she willing to sacrifice her morals, (or lack thereof), to make extra money at the expense of other people and other sectors of the economy? If they are, it could be a rough ride for the rest of business owners.
Kristina W. in response to Kayla M.
I happen to agree with what Kayla said in question 3 as to whether price gouging is necessary in a capitalistic economy. Price gouging, although some may feel is immoral, helps to increase the supply of a product, and decrease the demand. In the long run, this helps to decrease the price of certain recourses more quickly. I especially agree with the point she made in saying that in times of need individuals need to take a step back and reconsider whether they need something as badly as they first thought, because in certain areas, things may be worse, and an item may be needed a lot more--just like here after Sandy.
Frank I. in response to Josh B.
I disagree with your statement that price gouging hurts the local economy in the long run. Shifting prices is a method to produce profit any business owner would place into effect with any product. Although gas is an essential product for most, the laws of supply and demand were created through human nature which would allow those who truly need the product to adapt or simply accept the fact that in this time of need, price gougers have gained the opportunity to make more money. Gas isn’t a good that can be raised to any price due to competition anyways. The consumers may be hurt ever so slightly, but competition among rival stations would never allow gas to become unobtainable. It is easier to say that the government should help everyone by keeping prices low, but it is the economists and business owners who you , “don’t reap the hardships of natural disasters,” that understand this is a circumstance that should be acted upon just like in any other business.
Prady M responding to Josephine S
While your point about people who are below the poverty line is valid, what should be taken into a count is that this is a purely capitalistic idea. Price gouging is something that would only happen in purely capitalistic laissez-faire economies. This would mean that it is the ultimate competition with little to no regard for the poor. It is economic survival of the fittest and those deemed to be below the poverty line are the ones who will be slowly phased out. You can not allow price gouging and make concessions for the poor as that is contradicting your initial price-gouging policy.
Prady M responding to Hunter H
I believe you meant price-GOUGING* not price gauging.
Henry K. in response to Mark R. in response to Henry K.
I see the validity of the points you put forth, Mark, and I agree with your statement that price gouging is morally wrong. However, I feel that a violation of moral standards alone is not always enough to outlaw a practice. The solution you have put forth sounds like a great and equitable tradeoff. The flaw I see with it would be in the solution’s implementation. While neither of us have given any numbers as to what we would consider to be a “moderate increase”, based on the fact that the highest spike of gas prices that I saw during the hurricane was one of about 30 cents at an independently owned station, let me, for the sake of this response, equate this increase to one dollar. I feel that if the government were to create a set ceiling, then all businesses would bring their prices up to this value, therefore eliminating the competition inherent in a capitalistic society. In response to what you said regarding some businesses needing regulation due to their owner’s greediness, I feel that the invisible hand would eliminate this if there were to be no regulation. Like you said, only some businesses would act in this way and the prices of others would keep them from doing so.
Ryan H. in response to Kayla M.
Thank you Kayla. That is why great minds think alike.
Ryan H. in response to Josephine S.
Hey Josie. I understand your argument in question 3 and respect your opinion. However, price gouging is not as immoral as it seems. Price gouging allows distributors to TEMPORARILY raise prices. Now, from a consumer’s perspective, this is obviously not favorable and may cause some initial disapproval; but you need to look at the overall effects price gouging will provide. Raising these prices for a short amount of time will eliminate those long gas lines that we all hate because “top-offers” will not continue with their ways. If prices increase, people aren’t going to constantly top off their gas tanks every chance they get, allowing people who desperately need gas to purchase it. Also, price gouging will resolve the issue of shortages by returning the economy to normal and supply restored. Being initially frightening to the public is a much lesser problem than having permanent shortages and long gas line. It is just a necessary part of capitalism.
Ryan D responding to Jimmy B
I completely agree with Jimmy's response to Question 3 that price-gouging is a natural aspect of capitalism and should be encouraged. I also agree with his response in the fact that I also feel that price-gouging is necessary to end the gas shortage more quickly. Price-gouging causes people to think more carefully about whether they truly need gas. Price-gouging allows for the gas to reach the people who need it most without them having to wait in a 3 hour line and waste energy and time. I also agree with Jimmy's statement that "the shortage will last much longer with price ceilings than without them." Without price ceilings the demand for gas will decrease and the supply with increase, therefore putting an end to the shortage. Price-gouging is necessary to put an end to the gas shortage.
Kavita J responding to Danielle D
I completely agree with you for your answer of Question 3, and that price-gouging should be allowed because of its incentives to make people think. I also thought that price gouging was wrong at first because merchants/sellers shouldn’t be taking advantage of the public’s panic, but I think it is necessary. Like you said price-gouging makes people think about what is really necessary to buy and also allows people who actually need the good to buy it without any additional costs, like time. Although price gouging may seem morally wrong because it “impairs equitable access to essential needs,” sometimes it is necessary.
Kavita J responding to Judy K.
Although I agree with you that price gouging may seem morally wrong, I think it is actually a necessary part of capitalism. Hundreds of people, in mass panic, ran to the nearest gas station after Hurricane Sandy to just top off their tanks. Most of these people didn't need the gas, but since the incentive not to buy unnecessary goods wasn't strong enough, they wasted their time to "be on the safer side." If vendors were allowed to raise their prices significantly, only those who truly needed gas would consider buying it. Those who didn't need gas for their cars wouldn't have purchased it, leaving shorter lines and more gas available for people who need it to run their generators or drive their cars to work. Even if price gouging may seem morally wrong, I think it is a natural component of capitalism.
Chris D in response to Anthony G
Although I agree with you that price gouging is imorally worng, I think that it is a necessary part of laissez faire captilisim. It is the basic economic principles of supply and demand working as they should. Immediatley after Hurricane Sandy hit thousands of people raced to the nearest gas station to fill up their tanks and generators. Most of these people bought gas just to be on the safer side. FOr example some people would wait on line to fill their car up,when they had a half a tank left. Or some people would wait on line to fill more jugs of gas up for the generator, while they already had 3 cartons of gas filled up already. If vendors raised their prices signifiganlty and practiced price gouging, many of those people who desperatley didnt need gas would not wait on line to buy it. This would create shorter gas lines, and there would also be more gas available for people who truly are running out of it.Price gouging is morally wrong, but it is an important part of capitilism.
Faryn S in response to Kavita J. and Mark R.
At first I felt that price gouging was simply unethical, and that was it. I felt that it was not fair to have such high prices that not everyone can afford. However, Kavita’s point about people with nearly full tanks waiting in line just to be safe made me rethink. Also, Mark’s point of unreasonable raising of prices stood out to me. I feel that in order to maximize the efficiency of price gouging, a good idea would be to allow, but only to a certain extent. I think that in times of disaster, such as the gas situation made by Hurricane Sandy, price gouging should be allowed, but limited to help stabilize the supply and demand curves to normalcy.
Ellie C. responding to Thomas G.
I agree with you in some ways how price gouging can benefit the economy and since we live in a free market, businesses should be able to set whatever prices they want, but that should only be done under normal circumstances when you can go somewhere else to buy that product. When there is a natural disaster and substantial shortages, you really can’t go anywhere else, and if you’re someone who doesn't have extra money to spend but who actually needs that good, yes, there might not be a line, but you still may not be able to get it because you can’t afford it.
Ashley P in response to Lauren H
Although I agree with your first two arguments, I do not agree with your last argument. Price gouging is unethical and would only cause more devastation. If gas stations raise their prices people would not be able to afford gasoline and would not be able put money back into the economy. People are currently struggling to rebuild their lives after such a disaster and it is wrong for businesses to take advantage of consumers misfortune. Additionally, I think most people would accept waiting on lines as a tradeoff to raising gas prices.
Responding to Peter T.
Restricting the use of price gouging in a capitalistic society has no place. This is a fundamental aspect of the free market. While I agree that paying $7 per gallon is insane, I do not think it would ever come to that point. What would happen if McDonald's suddenly raised the price of a McChicken to $10? No one would buy this product, and they would be forced to lower the price until people are willing to pay for it, otherwise a place like Wendy's would become more popular. This works the same way with gas. Competition will drive prices down, while also cutting down lines. This will also save time, something I value much more than money. To a person like myself, price gouging may actually be helping me more than hurting me. Also price gouging in a "normal" situation would never happen, so that argument does not make sense.
Sara H. Responding to Judy K.
I completely agree with your argument. Like you said, it can be argued that price gouging is necessary for a capitalistic society because it is a simple process of supply and demand; however, the immorality of price gouging outweighs the “benefits” of it. It is not right for businesses to take advantage of people who are already struggling. In disasters there are so many other things to worry about other than, for instance, gas prices. Additionally, often times in disasters many people miss a lot of days of work due to power outages or weather conditions. For those who are living pay check to paycheck, these missed days of no income makes it really hard to get by. They don’t have the extra money (cash) to pay for the rising gas prices. If they can’t get to work, than they will have even less money to pay at the pump. The cycle wouldn’t end. Businesses should not take these times of hardships to take advantage of consumers. I also agree with you when you say it would harm the economy. People will have less money to spend on other products or services.
Taryn D. in response to Sarah H.
Using Hurricane Sandy as an example, I agree that people have a lot to worry about, but don't the gas shortages just add to their worries? Sure, there are people who wouldn't be able to get gas as a result of high prices, but there are also people who cannot wait on line for gas for hours upon hours whether the prices are low or not. If prices were allowed to rise as they are meant to, the higher prices would not last as long as the gas shortage has. People would not be forced to conserve their gasoline because none is readily available. Instead, they would decide for themselves whether to conserve it to avoid high prices or to spend the extra money.
Jimmy B. in response to Peter T.
You say that price gouging hurts the economy and takes away from the relief effort of a natural disaster, but I believe that it helps the relief effort and helps the economy in the area of a natural disaster heal from the natural disaster faster. In a natural disaster, people have increased need for things such as gasoline and batteries, so, therefore, the demand for these things is increased. The supply of these same things is also decreased because of the effects of the natural disaster (some of the quantity of the things was destroyed, it is difficult to ship products into a natural disaster-stricken area, etc.). Therefore, a price increase is a natural effect of a natural disaster, because an increase in demand coupled with a decrease in supply causes an increase in price. It is also logical to assume that, since an increase in demand and a decrease in supply cause price gouging, a decrease in demand and an increase in supply would set the prices back to normal. Allowing price gouging would cause exactly this. If prices are increased, demand will decrease because people will only buy the things with increased prices if they really need them to avoid paying the higher price. Supply would also increase because people from outside the disaster zone would rush into the disaster zone to sell their goods at the higher prices. This decrease in demand and increase in supply would cause the prices to drop, which would increase the quantity demanded, but the supply would already be high enough to satisfy this increase, and there would be little to no shortage of the goods demanded. If the prices were not allowed to be gouged, demand would not decrease, and a shortage would persist for a long time. The shortage would only end when there is enough supply to match the increased demand, which would take a very long time because sellers would have little incentive to sell their goods in the disaster zone as opposed to elsewhere because they cannot sell their goods for increased prices in the disaster zone. Very few people would travel far to sell their goods in a disaster zone when they can sell them close by for the same price. Therefore, I disagree with you on your response to question three, but I agree with your responses to questions one and two and I think the arguments you posed in these responses are very valid arguments.
Danese M.
Question 1 Response: My strongest argument in favor of price gouging is that it is mutually beneficial to both parties. People who overpay for necessities such as gasoline or generators at prices well above average still receive what they need, and the people selling the gauged items, benefit as well. Government intervention of price ceilings alters the basic concept of supply and demand. Supply is far from ample yet demand is exponentially increasing; amounting to a price far above average.
Question 2 Response: My strongest argument against price gouging would be that the victims of this practice need the item that they are buying. Although they are not tricked into buying whatever gauged product it might be, their needs are being exploited by a producer. The reason why the government has implemented price gauging laws in simply because economically taking advantage of someone is illegal.
Question 3 Response: I believe that to a certain, regulated extent, price gauging is a necessary aspect of capitalism. If gasoline were $10 a gallon, maybe people would not drive unnecessary drives or step on acceleration even though there is a red light ahead. And if generators at $900 a piece used that $10 a gallon gasoline, maybe people wouldn’t have every light on outside their house and every kitchen appliance on as well. It could lean our ways into a more conservative lifestyle. However, looking at price gauging morally is different; as to why I said although it is necessary, it should be regulated. The term gauging itself has a negative connotation; when a destitute diabetic man that has no power tells you, a greedy store owner, that he need ice to preserve his insulin, do you tell him that for $20 a bag he can do so? Regulated price “alteration” is a more appropriate way to go about price changes during any type of disaster.
Catherine F. in response to Sehar L.
I agree with Sehar that price gouging is a question of ethics and morals. However, I believe that price gouging is, in its own way, ethical. Though forcing consumers to, for a time, pay more for a necessity, it is better that they pay more than not be able to obtain the product at all. Even though price gouging causes people to pay more for a necessity, it at least promises them the possibility of attaining it. Though at first the suppliers are the ones benefiting from price gouging, the buyers benefit in the end. They have a larger supply to choose from, which not only forces prices down but makes the product available for many more people. If the price of, say, gasoline was kept artificially low, there would be a horrible shortage because people wouldn’t think anything of buying a large quantity for themselves since they can afford it. As the price increased however, people would conserve their gasoline (or other products) and only buy what they needed. This leaves a larger supply for others to use, enabling more people to purchase the product. So even though consumers have to pay more to get what they need, a larger number of consumers are able to get what they need.
vincent G in response to Josie S
when you say that price gouging will cause the economy to fail, but i believe that you are misguided with this statement. a few business' raising their prices will not have any effect on a national economy. this will simply cause less people to buy their product causeing their supply to increase and thier prices to lower
John V. responding to Catherine F.
I agree that, if price gouging is to be allowed, the prices will eventually go down due to competition among suppliers. However, the recovery of the island is predicted to take months. If the predictions are true, then who's to say that the time it would take for prices to go back down will not take just as long? Unlike people in New York City, most Long Islanders rely on their own cars for transportation. So when motorists are forced either to pay exorbitant prices or to rely on very inconvenient public transportation, overall recovery from the disaster will just be prolonged.
Nicholai Mitchko Responding to Henry K
Henry I also believe that price gouging is the necessary evil in our society. Price gouging is one of the aspects that reminds us that the "free" market is actually free. Price gouging actually helps in times of shortages by counteracting demand. In our case less people would be purchasing fuel.
Emma K. in response to Lauren H.
I agree with what Lauren said in response to question 3. I think that price gouging makes people think twice before they buy a good and therefore will decrease the demand. The decrease in demand will lead to an increase in supply and an end to shortages. I agree that there are arguments against price gouging, but in the short term price gouging will help to naturally return the market to equilibrium. For example by raising the price of gas temporarily only those in desperate need will be willing to buy, thus reducing lines and allowing resources to be used by people who need it.
William B. Responding to Josh B
I do not find it surprising that you have forgotten to take into account various benefits that price gouging will provide to consumers. It seems like your argument, largely ad-homemin in it of itself, conveniently focuses on the drawbacks of price gouging; however, there are many positives you must address before concluding. I think that the leveling effect that price gouging has, by reducing prices, considering the government allows the economy to operate naturally, this is arguably beneficial to consumers. Price gouging in this respect cuts out a lot of glut consumption due to speculative buyers. Hopefully, these positive factors will show that there is another side to your argument. In my opinion price gouging has various economic benefits, with two drawbacks, wonderfully articulated by yourself by the way, and they should be fully examined.
Adam H.
Response to Question One: The strongest argument for favor of price-gouging is that price-gouging is direct result of supply and demand in that as supply decreases, businesses are forced to raise their prices.
Response to Question Two: The strongest argument against price gouging is that consumers can be taken advantage of by private businesses that are allowed to charge whatever they seem fit, including in times of disasters like Hurricane Sandy.
Response to Question Three: In my opinion, price-gouging should not be allowed in times of disaster or for necessary goods. This is because when there are things like gas that people absolutely need and there's s a shortage of these goods, consumers are willing to pay anything and businesses will take advantage of this like John Maynard Keynes said,"the most wickedest of men will do the most wickedest of things." However i believe price gouging should be allowed for goods deemed as "wants" like iPhones and fancy cars because with these goods if the free market takes advantage of the prices here, the worst thing that could happen is some kid somewhere gets a little upset, unlike if someone doesn't can't afford gas they can't get to work and might lose their job.
Adam H. responding to Prady M.
I agree with your idea that price gouging will discourage consumers from buying goods they do not 100% need however, I disagree with your idea that this practice will then in turn encourage consumers to do more productive things in their because I personally believe that consumers don't act logically, especially in times of crisis. I can personally say that when my family was out of power my mom literaly spent every day using her phone and ipad till they died, then sat in the car charging them of the cars engine until she almost ran out of gas, then proceeded to sit on those lines to buy gas, just to waste it again. Clearly she did not act logically and spend her time being more productive. In fact she made her situation worse as a consumer because in a time of crisis the consumer, my mom, she used more of the good that was in a shortage as opposed to spending her time and money elsewhere.
Andrew K. in response to Adam H.
If the prices are gouged then those who do not direly need something (such as gas), will not rush to hoard it if the price is very high, thus lowering it overall. Also, you cut Keynes’ quote down originally it stated, “The most wickedest of men will do the most wickedest of things for the greatest GOOD of everyone." You also stated gasoline is a need and that people will lose their job if they cannot fill up, however, there are other methods such as carpooling and taking mass transit. In carpooling the gallon of gas per gallon per person would be fractionalized by each person in the car.
Noelle I in response to Catherine D
Cat, I do not completely disagree with your argument. I do in fact agree that price gouging is necessary at times, however in times of devastation price gouging is just one more thing to heap onto someones list of things they have to deal with. It’s completely immoral. At times like these, there are many other shortages besides gas and people can’t just go a few blocks away to the next gas station for a cheaper price. People won’t be able to afford gas anywhere if the price is too high. Although price gouging may look great on paper, it is unlikely the market will reach the new equilibrium you speak of. Business owners are much too greedy and will take advantage of people. Why are we increasing these prices so much anyway? For gas lines that will be just as short as they are now with odd and even gas strategy? There are so many smarter and cheaper alternatives to price gouging and it is just not necessary.
Matthew O responding to Vincent G
I agree with your arguement in saying that price gouging is a part of the free market economy but disagree with your statement how if people want a good they will pay more for it. I personally wouldnt pay 10 dollars for a gallon of gas but i still need this good, would you ?
Matt P. in response to Josie S.
I highly disagree with your arguments against price gouging. You say businesses hike up their prices because they know people are more willing to pay more money for a specific good, such as gasoline. This is not true. In aftermaths, such as Hurricane Sandy, businesses that sell gas are simply reacting to the laws of supply and demand. These high prices will shorten lines, and decrease shortages, as only the people who desperately need the gas will be on line to get it; since these high prices will also discourage people who really do not need the gas, and will encourage them not to hoard it out of fear, which would make the gas shortage worse.
Response to Question 1: Price gauging is viewed by some to stabilize the supply and demand laws and is a necessary part of economics. In addition, people believe that if the price of the product that is in such high demand is raised, people will not want to buy it and will instead conserve. When people refrain from buying the product, the demand will go down and so will the price, which goes back to my previous point: that some believe that price gauging will help stabilize supply and demand.
Response to Question 2: On the other hand, some believe that price gauging is unfair and it is another example of businesses taking advantage of the consumers. When the prices of gas skyrocketed, those who were in need of gas couldn’t afford it. Also, those in need of having a tree cut down after the storm knocked many over couldn’t afford to do it, which might have led to even more damage and inconvenience that many did not need after the hurricane.
Response to Question 3: I do not believe in price gauging. I believe that it is businesses taking advantage of consumers in need. I witnessed firsthand the effects of price gauging. A tree had fallen on my grandparent’s house that we are trying to sell. We called a company to cut down the tree, but they told us that it would cost $6,000. No one wanted to pay that much to cut down the tree, and the pressure on the roof of the house caused even more damage over time. Also, a few people looking into the house turned away from it because of the damage. Some believe that price gauging will be better in the long haul, but the effects from it can be devastating. If prices were not raised because of the storm, things would still balance themselves out because although these items were important for the storm, now that it is over and people are getting their power back, demand will go back to where it was.
Claire T. responding to Libby O.
You said yourself that “People against price-gouging are baffled at how others in these situations would be expected to pay higher than normal prices for resources they desperately need.” Exactly. People desperately need things like gas and batteries and water. If all of a sudden prices were raised by a huge percentage, how will those already struggling to pay their bills be able to afford to take care of their family during the storm? Those who lost their homes during the hurricane are in trouble and will need all the help they can get. If prices skyrocket all of a sudden because the products are in high demand, how will those people get the things they need? It’s like telling a starving and poor kid who found a ten-dollar bill on the street that he can’t buy a sandwich because sandwiches are in such high demand that their price went up to twenty bucks.
Post a Comment