We are into week two of the great toilet paper run of , and things are getting serious at our place. Things are even more serious for Australians finding it harder to buy essential medicines, as demand runs so hot that shortages are emerging. John Nash, famously played by Russell Crowe in the film A Beautiful Mind , won a Noble prize in economics for explaining why when humans need to co-operate to reach the best outcome, they often fail, leaving everyone worse off. His work helps explain why the rush on toilet paper is occurring.
Guest opinion: Coronavirus price gouging shouldn’t be criminal - Deseret News
Price gouging is a situation where business take advantage of an external crisis to charge excessive prices for basic necessities — selling the goods significantly above their usual price. Many countries have laws against the practise of price gouging — to protect consumers against unfairly high prices during a national emergency. A recent example of price gouging is individuals who have been stock-piling hand-sanitiser and face masks to sell for inflated prices during the Coronavirus. Matt Collin who stockpiled the hand-sanitiser said:. They sold bottles around the country before their online store was shut down and they were investigated for price gouging. During national disasters such as earthquakes, hurricanes or widespread disease, we can see an unexpected surge in demand for certain products. The disaster may also cause a fall in supply.
The Economics of Price Gouging
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The two definitions that result from a " define: price gouging " search in Google are pricing above the market when no alternative retailer is available wordnet. As can be seen by the second definition, price gouging describes an economic occurrence. The term "price gouging" is rather unfortunate, as it implies that someone is taking aggressive action against someone else and "gouging" them. Really, price gouging is merely a reaction to supply and demand and rarely has anything to do with suppliers taking advantage of consumers. For example, if a hurricane destoys oil platforms in the Gulf of Mexico, then the supply of oil decreases.