Price gouging is a pejorative term used to refer to the practice of increasing the prices of goods, services, or commodities to a level much higher than is considered reasonable or fair by some. This commonly applies to price increases of basic necessities after natural disasters. Usually, this event occurs after a demand or supply shock. The term can also be used to refer to profits obtained by practices inconsistent with a competitive free market, or to windfall profits. In some jurisdictions of the United States during civil emergencies, price gouging is a specific crime. Price gouging is considered by some to be exploitative and unethical and by others to be a simple result of supply and demand.
Price gouging is similar to profiteering but can be distinguished by being short-term and localized and by being restricted to essentials such as food, clothing, shelter, medicine, and equipment needed to preserve life and property. In jurisdictions where there is no such crime, the term may still be used to pressure firms to refrain from such behavior. The term is used directly in laws and regulations in the United States and Canada,[1] but legislation exists internationally with similar regulatory purpose under existing competition laws.
It is sometimes used to refer to practices of a coercive monopoly that prices above the market rate by deliberately curtailing production.[2] Alternatively, it may refer to suppliers' benefiting to excess from a short-term change in the demand curve.
Price gouging became highly prevalent in news media in the wake of the COVID-19 pandemic, when state price gouging regulations went into effect due to the national emergency. The rise in public discourse was associated with increased shortages related to the COVID-19 pandemic. The resulting inflation after the pandemic has also been blamed, at least in part, by some on price gouging. During the pandemic, the idea of 'greedflation' or 'seller's inflation' also moved out of the progressive economics fringe by 2023 to be embraced by some mainstream economists, policymakers and business press.[3]
- ^ Cowley, Jenny; Tomlinson, Asha; Matteis, Stephanie (November 21, 2020). "Provinces promised crackdown on pandemic price gouging. In fact, there have been few repercussions". CBC News. Retrieved March 15, 2021.
- ^ "Lawrence Kudlow". Jewishworldreview.com. June 14, 2000. Retrieved September 25, 2016.
As such, Microsoft fails to meet the traditional standards of a coercive monopoly, i.e., one that price-gouges consumers by deliberately curtailing production. If there was a reason to justify trust-busting a hundred years ago under the Sherman anti-trust act, this was it.
- ^ Peck, Emily (May 18, 2023). "Once a fringe theory, "greedflation" gets its due". Axios.