Price Gouging: Not as Bad as You Think

PRICE GOUGING NOT AS BAD AS YOU THINK. Price Gouging: Opportunistic behavior designed to take advantage of an unforeseen opportunity. After Hurricane Sandy over 100 people have been confirmed dead. SANDY'S DAMAGE ESTIMATES ARE $50 MILLION MILLION Hurricane Sandy left 8 MILLION people without power PARIMENT FEMA Hurricane Katrina left 1.7 MILLION OMELAND 182,000 people without power has approved More than SECURITY $158 MILLION individuals in Connecticut, New York and New Jersey in individual assistance for families and individuals without power have registered for assistance from FEMA. SUPPLY WHICH IS ROUGHLY $850 WORTH OF SUPPLIES PER INDIVIDUAL -versus DEMAND PRICE GOUGING during HURRICANÉ SANDY PRICE SUPPLY 1 WEEK LATER DEMAND 600+ PRICE GOUGING COMPLAINTS OF ESSENTIALS IN STORM-STRICKEN AREAS. BOX OF MATCHES $10 QUANITITY LOAF OF BREAD $7 PRICE GOUGING GENERATOR $1,100 is it AVAILABLE GAS $8 LEGAL? Prices for a gallon of gas on craigslist GAS for SEX MORE THAN 12 people were bartering for gas on craigslist AT LEAST 13 STATES HAVE SPECIFIC LAWS TO DEAL WITH PRICE GOUGING in the event a state of emergency is declared. Alabama, Arkansas, Florida, Georgia, Indiana, Louisiana, Mississippi, New York, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia FOOD General Business Law prohibits Definitions are different state by state GENERALLY GOUGING IS A 10 TO 25% INCREASE WATER charging more for essential items and services during emergencies: GAS over prices 30 days before an emergency. GENERATORS Laws are addressed towards vendors, retailers, and suppliers BATTERIES "During emergencies, New Jerseyans should look out for each other,not seek to take advantage of each other." - Governor Chris Christie including but not limited to supermarkets, gas stations, hardware stores, bodegas, delis, taxi and livery cab drivers. FLASHLIGHTS TRANSPORT such as TAXIS ECONOMISTS SAY, IS THE GOVERNMENT helping by BANNING GOUGING? NO!" 199 UNITS DEMANDED = SHORTAGE QUANTITY QUANTITY Economics 101: DEMANDED SUPPLIED AT CONTROL PRICE "ANTI-PRICE GOUGING LAWS ARE REALLY GUARANTEED SHORTAGE LAWS" Mark Perry, professor of economics, University of Michigan WHEN SUPPLIES ARE DIFFICULT TO OBTAIN KEEPING SUPPLIES AT CORRECT LEVELS RAISING PRICES RAISING THE PRICE REDUCES DEMAND DEMAND PRICE Encourages conservation and prioritized thinking. Raises confidence that shortages will not occur. Panicked first-comers cannot afford to stockpile all available supplies. TEMPORARY HIGH PRICES attracts resources from surrounding areas, flooding the market with what is needed most, lowering prices back down. NOT RAISING PRICES TO MEET DEMAND Shortage due to stockpiling hoarders creates an un- regulatable black market for supplies. Black markets encourage price gouging among other more dangerous crimes. IS IT LEGAL TO price gouge ON CRAIGSLIST? "THE MARKET HAS GONE FROM STORES INTO CRAIGSLIST AND NOW WE HAVE THIS INFORMAL MARKETPLACE." -Mark Perry, protessor of economics at UM-Flint IT IS UNCLEAR IF GOUGING ON CRAIGSLIST IS ILLEGAL DEFINITIONS WITHIN PRICE GOUGING: GENERAL BUSINESS LAW § 396-R WHAT IS "NO PARTY WITHIN THE CHAIN OF DISTRIBUTION OF SUCH CONSUMER PRICE GOUGING? GOODS OR SERVICES OR BOTH SHALL SELL OR OFFER TO SELL ANY SUCH GOODS OR SERVICES OR BOTH FOR AN AMOUNT WHICH REPRESENTS AN UNCONSCIONABLY EXCESSIVE PRICE." -Mark Perry, professor of economics at UM-Flint DEFINITION OF ANY MANUFACTURER, SUPPLIER, WHOLESALER, DISTRIBUTOR "ALL PARTIES WITHIN THE CHAIN OF DISTRIBUTION OR RETAIL SELLER OF CONSUMER GOODS OR SERVICES. DEFINITION OF "UNCONSCIONABLY UNDEFINED EXCESSIVE PRICE THE ATTORNEY GENERAL SUBPOENAED CRAIGSLIST TO IDENTIFY HUNDREDS OF ADVERTISERS WHO REPORTEDLY GOUGED PRICES. PRICE GOUGING LAWS Change how you pay, not what you pay CRAGISLIST.ORG Craigslist has the right, but not the obligation, to regulate content.. If the market clearing price is $25/gallon but the legal max price is $4 gallon, TERMS OF SERVICE If several people want 5 gallons, "AS LONG AS SELLERS AREN'T EARNING MORE THAN $600 IN EACH QUARTER OF THE Someone will pay $125 per gallon in cash. YEAR FROM RESELLING, THERE 'REALLY IS NOT A TAX IMPLICATION INVOLVED HERE" Another will pay $105 worth of sexual favors. Someone else will spend $105 worth of time waiting in line for the $4 a gallon gas. -Geoff Gloak, New York Taxation and Finance Department WHO IS RIGHT? SOURCES N NOWSOURCING http://www.forbes.com/places/ny/new-york http://www.learnliberty.org/content/economics-natural-disasters presented by: BestCriminalJustice.com http://www.fema.gov/news-release/federal-family-and-partners-continue-support-states-impacted-sandy http://www.businessweek.com/news/2012-11-06/new-york-looking-into-craigslist-gasoline-sales-at-8-a-gallon