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Notes -
What is "price gouging"?
I hear it a lot lately, specifically as something that grocery stores are doing with food prices.
My instinct is that if retailers raises prices, even if only because they think customers will pay more, and then customers do pay more, then that is the new market price. As such, there can't really be "gouging" by definition, no matter what price retailers set.
"Your prices are too high! They're charging half as much across the street!"
"So why don't you buy from across the street?"
"They're out of stock."
"Ah; then when I run out of stock, I promise to start charging a third as much!"
It's generally agreed that the guy out of stock, with an effective price of infinity, is a good guy, while the guy "price gouging" is a bad guy, and the only sense I can make of that is to interpret it under the Copenhagen Interpretation of Ethics. How else could it make sense that, if I drive a truck full of generators into a hurricane zone to resell at a markup, they might just be confiscated when I'm arrested for being so awful, while if I sit on my butt refusing to sell generators to blackout victims at any price somehow I'm still a good guy? I fear human ethics only evolved to deal with around a Dunbar number's worth of tribe mates, a situation where basically everybody's family, everybody you give and receive with has an obligation to sacrifice for you if you fall under hard times and vice-versa, and rationing can be done by explicitly considering every single individual's need for a particular good ... which means our ethics don't work out so well in cases where there are orders of magnitude more people to potentially trade with, trying to enforce charity or insurance based on implicit cultural understandings without contracts or at least government programs can backfire horribly, and our only scaleable rationing mechanism is pricing.
Something can be immediately beneficial, but produce incentives that make people worse off.
The argument "what else would induce me to drive into a hurricane zone to seel the generators" implies that we should accept some level of price increase, but it may not be true that the level of price increase you actually get is equal to the level that you must accept in order to encourage the sales.
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