In my first blog post I stated that I would try to avoid controversy. Having said that, I will, from time to time, present a point of view that may not be popular.
Today let us address a topic that has been in the news of late, particularly in the hurricane-affected regions of our country – price gouging. Wikipedia defines it as: “a pejorative term referring to when a seller spikes the prices of goods, services or commodities to a level much higher than is considered reasonable or fair, and is considered exploitative, potentially to an unethical extent.” The term carries an unsavory connotation, doesn’t it?
Let’s turn to a typical economics blog for a different view. Here is a link to one of Mark Perry’s posts on the subject over the years: An economic analysis of market prices v. price controls post-natural disasters reveals superiority of market prices.
Other economists that I follow tend to agree with him. What do you think? Please let us know through the “Have a Question” section of our website’s home page or you can always e-mail me directly at Jim@petrafin.com.
Personally, I believe that freedom, the free enterprise system, and the marketplace (all of us functioning collectively in our individual pursuits) are the best ways to allocate limited resources. On the other hand, are there not times when people are in dire need of temporary assistance and protection?
Uh, oh. I said, “on the other hand.” Have I been reading economists too much?
Until next time, cheers!