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As a first pass, it's helpful to think about the basic ideas of surplus, and I'm surprised that no one has discussed this aspect of the question yet. It is a basic fact, one that we learn in our intro to economics that the market-clearing price maximizes total surplus: consumers with the highest valuations for the product obtain it. Crucially, the mechanism ...


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There is a behavioral literature that warns against `price gouging'. Two Nobel Prize winners, Richard Thaler and Daniel Kahneman, conducted surveys with Jack Knetsch. They report that 82% of survey respondents say that raising the price of a snow shovel when a snowstorm is approaching is unfair. The reasoning is based on Thaler's concept of 'transaction ...


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There are no laws against "price gouging" where I live, at least the price of medical masks has increased 3-10 fold in the recent weeks, due to the coronavirus outbreak. Yet there is still a shortage of masks. (Also several other things.) Why is this? You write that in the absence of price gouging laws Supply would increase. Increased prices signal ...


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Actually economics does not even officially use term price gouging. Your analysis is right, actually economists dislike anti-price gauging legislation for this reason. For example, when the IGM panel of top policy economists were asked about one piece of price gouging legislation in the US, vast majority disagreed with it: However, an important caveat to ...


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The variable price structure you propose would be challenged on two fronts: straw man purchases and grey-market sales. The most common examples of these phenomenon from an empirical standpoint are the restricted alcohol market for minors prompting straw man purchases and grey-market sales of EBT cards. The EBT card situation is particularly interesting ...


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