Price Gouging


In the aftermath of the hurricane hitting Houston, stores were seen raising prices of water and other things by 5 and 6 times, the same with gasoline. A post on Facebook cited cases of water over $20 a case, and gas at $8 a gallon.

Should price gouging be allowed?


I don’t think this is price gouging. Realistically speaking these supermarkets will have extreme cash flow and logistical problems, so they’re covering themselves too. Might have urgent repairs to make with no line of credit to fund it.

Delivering a crate of milk 80 miles through trodden power cables, localised floods, fallen tree branches and closed roads is not going to cost you $0.05 per pint anymore, more like $2 per pint. Fedex didn’t operate after Katrina, for example, so there’s also problems with logistical companies not working at all.

Charity after disasters should be left to national businesses, charities and the state and federal governments, not local businesses who are the most vulnerable to the damage, because they won’t exist 6 months down the line. For many of these store owners their entire livelihoods would be destroyed.

Don’t outlaw price gouging after Harvey. Let the market work



k11 makes an important point about the increase in prices necessarily reflecting changes in production costs in the aftermath of natural disasters. In such cases, we would hesitate to say producers should charge below production costs, because we realise they would go out of business fairly quickly.

This considered, it is not inevitable to consider instances of ‘price gouging’ which do not result from increased production costs. One recent example which provoked a similar public outrage is when Uber raised its prices in London after a TfL strike on the Underground. Here, Uber used the advantage of lowered competition to increase its prices, knowing that more users want to hail a cab when the Underground is down, at no extra cost to the company or its drivers.

There are two benefits to this. Firstly, the increased prices mean increased profits, and these entice cab drivers to come to London in order to better use these profits. After all, why make a pittance in Eastbourne when you can spend the day in London making much more money as prices there have gone up? As more cab drivers come, prices should be allowed to fall through competition between them, as individual customers have more choice on which cab driver to choose (something which Uber’s pricing algorithm takes into account).

Secondly, the increased profits mean that resources are only used by those who need them more. It is better for society if cabs aren’t wasted on people going a short distance to the shops, but rather on people who actually need the cabs, such as those rushing to the hospital. £50 might be a lot for a trip to the hospital on a normal day when it would cost £2 on the Underground, but you’d sure you pay it if it’s important. But if the cab prices were reduced to, say, £10, that cab you would have got would probably have gone to someone else who needed it less, such as someone going to the shops for whom £10 is nothing.

Of course, this second point raises two questions about price-gouging. Firstly, is it true that those who need things most necessarily can afford those things? Maybe you can’t afford £30 for the hospital, even if that’s what you would be willing to pay if you had it! Secondly, is it ‘fair’ that you should have to pay £30 when, on a normal day, you would only have to pay £10, and this is an extraordinarily unlucky day both because the Tube is down and you have to rush to the hospital?


The price would need to go up at some point, so either increase the price locally or nationally. Either way hurricanes effect the corporate element as well with logistical malfunctions and the like.


Rapid price increases to account for increased logistical demands aren’t really price gouging IMO, though they may be considered unethical for other reasons (i.e. people need these supplies and now they can’t afford them). However, price gouging in cases such as Martin Shkreli with the HIV drug price hike or Mylan with the EpiPen price gouge, should definitely be illegal; in fact, price gouging for all essential medical equipment not due to logistical factors should be internationally illegal.