Many states have laws against "price gouging" during an emergency.
Are these laws counterproductive?
Take the current situation with toilet paper and water. When someone sees rolls of toilet paper on the shelf, they buy them all. Not because they necessarily need it, but out of fear the next person will buy them all and there won't be any left when they do need it. This creates a positively reinforcing feedback loop of negative cause-and-effect a/k/a/ a "vicious cycle."
But if prices spiked in response to meet demand, the feedback loop cycle would slow because two good things would happen that aren't happening now.
Supply would increase. Increased prices signal suppliers (whose marginal costs remain constant) to manufacture and ship more product in order to maximize profit.
Hoarding would mitigate. Hoarders would have less incentive to hoard supplies of water, toilet paper, etc. unnecessarily if they were paying significantly higher prices than normal. Then there would be adequate supply left for those who need it and aren't simply overstocking out of an abundance of caution. Moreover, would-be hoarders would feel like the next guy also has less incentive to hoard and thus quell their fear of being left with no supply when needed.
Is this a correct economic analysis or am I missing something that justifies "anti-price-gouging" laws?