Finishing (we hope) a recent series of blogs on “price gouging,” we want to alert readers to a blog written byNobel laureate Gary Becker and 7th Circuit Court of Appeals judge Richard Posner. Both have commented on this issue.
Becker’s posts are here and here, and Posner’s are here and here, all located at their eponymous blog. Both reject laws against “price gouging” as a irresponsible public policies. They both underscore the political advantages of such laws and their economic foolishness.
Still,neither of these distinguished scholars acknowledges an additional political benefit available to office-holders that might explain why such laws are so popular legislative remedies. Legislating against “price gouging” allows office-holders to claim credit for solving the problem of “price gouging,” and also to shift responsibility for the predictable and adverse economic effects such laws have.
That is, the same people and companies who can be blamed for “price gouging” if they charge market prices also can be blamed for the resulting shortages if they comply with the law.