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A Note on Price Gouging and Economic Triage

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A few links in Matt Zwolinski’s price-gouging round-up [2] touch on the point I’m about to make – for example, see Tyler Cowen’s important observation [3] that prohibitions on “price gouging” might cause retailers to use some valuable inventories themselves rather than make those inventories available for sale – but one often-overlooked ill consequence of prohibitions on price-gouging is that it interferes with economic triage.  Here’s a true story from 2003 [4] – and a quotation from that account:

These price increases [that occur as a consequence of a natural disaster] direct repair firms and suppliers to attend first to those who need their services and supplies most urgently. In other words, these price increases perform the vital task of economic triage.