Anti-Price Gouging Laws. A Good Idea?

Bumped and updated:
The New York Times and Amazon seem to think keeping these bottles of hand sanitizer off the market because of "price gouging" is a good idea. That's crazy!

The man pictured is an entrepreneur and he's taken a risk by procuring all of these sanitizing products. Remember: he has to pay the manufacturer to obtain the products to sell. He had to purchase all of these units with no assurance he would be able to ultimately sell them. If others undercut his prices, he could go broke with a garage full of product.

But, if you want these products delivered to your front door rather than going to the grocery store, you might have to pay a premium. It should be up to you. 

While I can't comment on his specific prices, people are free to purchase them or not. If we put the 17,000 bottles on the market, it will increase supply. If the supply increases, then pressure on the supply chain will decrease and prices, overall, will come down sooner. If he prices himself out of the market, that's his problem.

-- original posting ---
Kansas government sometimes has odd ideas.
How can 'anti-price-gouging' be bad? Let's think this through.
  • In these types of circumstances, items can be in short supply. Think of the "toilet paper" 'runs' (pun intended) of recent days. Raising prices can help lessen those. 
  • But, in these circumstances, the store has to stock more toilet paper. 
  • The factory has run extra shifts -- more overtime than normal, if they can get people to come to work given the states of emergency. Costs go up. 
  • While the price of fuel is down, finding truckers may be difficult because of disruptions all throughout the supply chain. 
  • Getting people to come to work in a confined place like a grocery store may be difficult and might require extra wages. 
If you want to have full grocery stores in a time like this, it may cost more. Isn't that how "supply and demand" is supposed to work? 

Kathleen and I have always kept 30 days of supplies on hand. That has three advantages. The first is that we purchase things at standard prices. The second is that if more people did this, it would take pressure off the system when a crisis occurs. The third is that we don't have to worry about shortages.

--- end of original post ---

I want to be clear: Let people price their products as appropriate. That said, "cornering the market" is undoubtedly bad and is rightfully illegal. To take an extreme example, if Warren Buffet, during a crisis, purchased the only factory that could produce hand sanitizer and intentionally, cut production and raised prices ten-fold, that would be both immoral and illegal.


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