This article discusses how economics can be useful in navigating the line between recognizing the market realities of a crisis and running afoul of price gouging laws.
During declared states of emergency, sellers that raise prices may face allegations of price gouging, leading to civil suits, state enforcement actions, and in certain circumstances, federal enforcement actions. The current state of emergency is no exception: the coronavirus pandemic has already begun to generate price gouging complaints, such as allegations that retailers and retailer platforms charged excessive prices for a range of items. Meanwhile, consumers across the country have experienced shortages of certain goods.
Economists recognize that rising prices and shortages represent two sides of the trade-off inherent in considering price gouging laws. In this article, author Laurien Gilbert discusses how economics can be useful in navigating the line between recognizing the market realities of a crisis and running afoul of price gouging laws.
This article was originally published in Monopoly Matters by the Unilateral Conduct Committee of the American Bar Association’s Section of Antitrust Law in June 2020.
The views expressed herein do not necessarily represent the views of Cornerstone Research.
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