Question

• Is Price gouging criminal or is it the free market working efficiently?

- Think about the pros and cons of a market approach or a legal approach as one suggestion.

- Be more detail as possible

Answer 1

Price gouging is an increase in the prices of goods and services by the sellers. The prices are raised beyond the level which could be called a reasonable price. It is a crime at the time of emergencies and disaster. When the society is in need for the basic necessities then increasing the prices of items like food and clothing etc beyond a reasonable range is a crime. It is a legal crime in many countries.

If we take the legal approach then in many countries like United States price gouging is a criminal offense. The aim is to protect the interest of public. So that the sellers cannot exploit the common man by increasing the prices of essential items exorbitantly.

There are economists who have argued that taking this approach will result in lower supply of necessary goods and services and hence in scarcity of resources.

Taking the market approach we may state that though Price gouging is a type of profit making but it is capable of harming the public interest by restrictions on the basis necessities that are essential to preserve lives in difficult times.

The other perspective is that by charging higher prices business men can better handle the crisis. Also sellers coming from outside the disaster zone will be compensated for their transportation costs. Failing these , the business and the sellers might choose not to provide the essential items. This will result in difficulties for the society .