With America just suffering from a large natural disaster such as Hurricane Sandy, price gouging comes into play. Price gouging is an opportunistic behavior designed to take advantage of an unforeseen opportunity. So, is price gouging hurting Americans or are we benefiting from the act?
Hurricane Sandy swept through our country leaving over 100 people dead and causing $50 million worth of damages. With the help of FEMA, they have approved $158 million in individual assistance for families and individuals without power. With more than 182,000 people registered for assistance from FEMA, this is roughly an amount of $850 worth of supplies per individual.
Is this price gouging legal though? There are 13 states who have specific laws to deal with price gouging in the event a state of emergency declared. This General Business Law prohibits charging more for essential items and services during emergencies such as food, water, gas, generators, batteries, flashlights, and transportation such as taxis.
With a higher demand in products, supply decreases and in turn causes a shortage. Raising prices will encourage conservation and prioritized thinking as well as raise confidence that shortages will not occur. If the prices are not raised, shortage due to stockpiling hoarders creates an un-regulatable black market for supplies and black markets encourage price gouging and other more dangerous crimes. The temporary high prices attracts resources from surrounding areas, flooding the market with what is needed most, lowering prices back down. So, where do you stand? Price gouging or not?
Check out the infographic below presented by Best Criminal Justice to learn more about price gouging.