08/30/2017
Hurricane Harvey is leading to a rash of complaints about price-gouging: A classic example of when the efficiency of freely operating markets clashes with the equity of keeping necessities affordable in times of emergency.
Texas does have a law prohibiting "Demanding an exorbitant or excessive price in connection with the sale or lease of fuel, food, medicine or another necessity."
But some argue (on the basis of supply and demand models) that allowing price to rise would help alleviate shortages, but the extent of that depends on the elasticity of supply, which is probably quite small in the very short run.
Thoughts?
The Texas attorney general's office has received nearly 700 consumer complaints, most of which involved price-gouging of basic necessities.