Can high prices during emergencies actually save lives? Using North Carolina as an example, we dissect the economic and legal implications of these laws, exploring the ambiguities in terms like "unreasonably excessive" and the chilling effect on commerce. Discover how artificially low prices can lead to resource misallocation, discourage stockpiling, and hinder the transportation of vital supplies during crises. Allowing higher prices is, perhaps surprisingly, the only way to get low prices soon.
This week's economics joke:There's been a hurricane and people are desperately searching for things that they need. The owner of a convenience store has set aside some cases of bottled water in advance, knowing that people would need it. He knew the storm was coming and so he filled up his storerooms with as many cases of bottled water as he could get. Now he puts out the cases of bottled water and they're $40. So 24 plastic bottles of drinking water for $40, which is quite expensive. A customer comes in, immediately becomes angry, and complains, "You know, the price down the street is only $12 per case. Why are you price gouging?" The owner is puzzled. "Well, that's fine, why don't you go buy your water down there? It's up to you." Customer says, "Well, they're out, the shelves are empty, but their price is $12. You shouldn't be charging $40." The owner says, "Oh, oh, I see. I tell you what. As soon as I run out, I promise I'll drop my price to $10. An even lower deal!"
