Price Gouging– when retailers and others take advantage of spikes in demand by charging exorbitant prices for necessities, often after a natural disaster or other state of emergency.
That is a definition from the National Conference of State Legislatures in an article on price gouging statues on the books in thirty-seven states. The laws focus on price increases of necessities during natural disasters or a state of emergency to help preserve order and may also be combined with anti-hoarding laws. While the cost of physical items like food, water, medicine, gas, oil, batteries and building supplies may be subject to price gouging laws, services such as roofing repair, plumbing, heating and clean-up are also covered.
There are currently no federal price gouging laws, but that may change… the Price Gouging Prevention Act of 2022 was introduced in the Senate and the House in May. The bill would empower the Federal Trade Commission (FTC) to enforce a federal ban on selling a good or service at an “unconscionably excessive price during an exceptional market shock”. The FTC would determine the extent of the price increase and the market shock. Proposed penalties for offending entities could be as high as 5% of total revenue.
Is this bill a needed measure to protect the U.S. consumer, a well-intentioned measure that may make matters worse or something in between?
I’ve included a view on this subject from the Chicago Booth Review. It’s a quick read that provides an overview of the thoughts of the U.S. Economic Experts Panel of the Booth Initiative on Global Markets. What are your thoughts on price gouging or on this bill? Let me know!
~ Brian Kasal- The Leadership Matrix
Click here- Should the US Outlaw Price Gouging?
P.S.- Did you see my last Leadership Matrix post? Click here- Goodbye to the Green Lawn?
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