Price Gouging in a Time of Sea Change

The purpose of price gouging laws is to prevent excessive pricing and profiteering in a state of emergency. But price gouging laws in the United States, exemplified by those enacted by state governments, were generally designed in anticipation of particular types of emergencies or natural disasters and as a result may embody approaches that strain to address the economic effects of novel emergencies such as the COVID-19 global pandemic. This article discusses challenges that arise in applying existing price gouging laws in the wake of widespread economic shocks with long-lasting dimensions and explains how economic analysis and modeling may help sort out these issues.

By Timothy Snail & Mary Beth Savio¹

The purpose of price gouging laws is to prevent excessive pricing and profiteering in a state of emergency. But price gouging laws in the United States, exemplified by those enacted by state governments, were generally designed in anticipation of particular types of emergencies or natural disasters and as a result may embody approaches that strain to address the economic effects of novel emergencies such as the COVID-19 global pandemic. This article discusses challenges that arise in applying existing price gouging laws in the wake of widespread economic shocks with long-lasting dimensions and explains how economic analysis and modeling may help sort out these issues.

I. THE ROLE OF PRICE GOUGING LAWS IN AN EMERGENCY

Price gouging laws have been enacte