The surprising history of price gouging

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Price gouging has been a controversial and much-debated topic for centuries. Some people believe that price gouging is simply a way for businesses to take advantage of consumers during times of need or emergency, while others argue that price gouging is a necessary evil that allows businesses to stay afloat and continue to provide goods and services during difficult times.

So, what exactly is price gouging? Price gouging occurs when businesses sharply increase the prices of goods or services during periods of high demand or limited supply. While there is no set definition of price gouging, the general consensus is that it occurs when prices are increased by more than is necessary to cover the businesses’ increased costs.

Price gouging is often seen as unethical, and it’s illegal in many jurisdictions. In the United States, for example, the Federal Trade Commission has a law against “unfair or deceptive acts or practices in or affecting commerce.” This law prohibits businesses from engaging in a wide range of activities, including price gouging.

Despite the legal prohibitions against price gouging, it still occurs frequently. Businesses may justify their actions by citing the increased costs they incur during periods of high demand, such as higher prices for raw materials, labor, or transportation. But critics argue that these increased costs are often passed on to consumers in the form of higher prices, without any guarantee that the goods or services will actually be available.

In some cases, businesses may be able to increase their prices without running afoul of the law. For example, if a business has a monopoly on a good or service, it may be able to charge whatever price it wants. In other cases, businesses may be able to raise prices without breaking the law if the prices are part of a posted schedule, such as airfare prices that can fluctuate based on demand.

Still, even in these cases, businesses may be accused of price gouging if the prices they charge are perceived as excessive.

Price gouging has been in the news a lot lately due to the coronavirus pandemic. Reports of businesses selling essential items, such as hand sanitizer and face masks, at sharply increased prices have led to calls for stricter regulation of prices.

Government officials in some states, such as California and Florida, have taken steps to crack down on price gouging. California’s attorney general, for example, has filed lawsuits against several businesses accused of price gouging, and Florida’s governor has issued an executive order prohibiting businesses from increasing prices on essential goods and services by more than 10%.

It’s unclear how effective these measures will be in curbing price gouging, but they show that the issue is receiving increased attention from policymakers.

Whether you believe that price gouging is always wrong or sometimes necessary, one thing is clear: it’s a complex issue with a long and surprising history.

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