Market Price
Please read the following articles which are attached:
Many economists defend disaster profiteers. They are wrong, The Economist (Finance & Economics), April 11, 2020
Disaster profiteering Price Gauging: a cautionary tale, The Economist (Finance & Economics), October 22, 2020
In a market, price is the mechanism that brings a market to equilibrium. If there is an excess supply or an excess demand for a good, the market responds by changing price to eliminate the excess supply or demand.
Emergency situations often increase the demand for a good or service, resulting in an excess demand. The market response would be an increase in price. The larger is the excess demand, the larger would be the increase in price. This increase in price is sometimes viewed as price gouging.
Please have a discussion, keeping the following questions in mind:
What is price gouging? When does an increase in price become price gouging?
Can you distinguish between economic issues and ethical issues?
In a market, price is used to ration the good or service. Should price gouging be avoided? If so, how can it be avoided? If not, why should it not be avoided?
What are the ramifications of price gouging? That is, who is affected?
In the second article (above), who gains from the fines that the shop proprietors pay? What do you think becomes of the revenue accumulated from the fines? What should be done with this revenue?
Should the government step in to prevent increases in price? What guidelines should the government follow?
Please post your thoughts. [You do not need to address every consideration listed above. They are provided as something to discuss and a means to begin a discussion. Feel free to express other issues or thoughts on the matter.]
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