> If every store tripled the price of bottled water you would have truckloads of water arriving within 24 hours with absolutely no government intervention at all.
In natural disaster scenarios, this is likely impossible as delivery infrastructure usually goes down for some period of time. This is why price gouging is successful for the businesses raising prices in first place.
> It would also mean that smart entrepreneurs would pre-stage needed supplies in anticipation of the price increase.
Businesses do not do a good job of stockpiling resources for exceptional events that happen once in many years and many businesses view this as a cost that is not worth paying.
> With strong 'gouging' laws, there is no incentive to spend money on preparing the supply chain or in spending more money to overcome supply difficulties (i.e diverting supplies from elsewhere, rushing delivery, etc)
There is no incentive in general since there is an very low probability that work on on delivery and supply channels will actually pay off as it is a low probability that a disaster scenario will happen in the first place.
> With strong 'gouging' laws, there is no incentive to spend money on preparing the supply chain or in spending more money to overcome supply difficulties (i.e diverting supplies from elsewhere, rushing delivery, etc)
Most historical examples of price gouging never worked out this way. On a logic basis, this doesn't make sense as the point of price gouging is to maximize revenue from sale during a short window of time while new supplies and materials cannot make it to the area where you are selling the now highly priced goods.
The utility of 'price' (whether it involves "gouging" or not) is to signal the entire marketplace regarding the current state of supply vs. demand. The market is dynamic and responds to the signal.
If you attempt to legislate the rules regarding price you are making it illegal to respond to the signal. This just leads to oversupply and legally enforced profit (the price is too high) or shortages and legislative enforced queues and delays (the price is too low).
> The market is dynamic and responds to the signal.
W.r.t to price gouging, this is the thing that doesn't happen or doesn't happen quickly enough and means people who can't afford the new high price go without. For essentials like food, water, batteries in a no power situation, etc. that is a huge problem.
How 'quickly' is not quick enough for you? Companies like Walmart and Home Depot are getting pretty darn good at responding to disasters, especially for things like hurricanes where there is considerable lead time.
Smaller events like tornados are much easier to respond to because they are localized.
Price gouging laws negate any sort of systemic planning to take advantage of short-term price spikes. Eliminate the laws and you open up opportunities for creative businesses to plan and respond to these short-term opportunities.
In natural disaster scenarios, this is likely impossible as delivery infrastructure usually goes down for some period of time. This is why price gouging is successful for the businesses raising prices in first place.
> It would also mean that smart entrepreneurs would pre-stage needed supplies in anticipation of the price increase.
Businesses do not do a good job of stockpiling resources for exceptional events that happen once in many years and many businesses view this as a cost that is not worth paying.
> With strong 'gouging' laws, there is no incentive to spend money on preparing the supply chain or in spending more money to overcome supply difficulties (i.e diverting supplies from elsewhere, rushing delivery, etc)
There is no incentive in general since there is an very low probability that work on on delivery and supply channels will actually pay off as it is a low probability that a disaster scenario will happen in the first place.
> With strong 'gouging' laws, there is no incentive to spend money on preparing the supply chain or in spending more money to overcome supply difficulties (i.e diverting supplies from elsewhere, rushing delivery, etc)
Most historical examples of price gouging never worked out this way. On a logic basis, this doesn't make sense as the point of price gouging is to maximize revenue from sale during a short window of time while new supplies and materials cannot make it to the area where you are selling the now highly priced goods.