Pros and Cons of Anti-Price Gouging Legislation (490 words)

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Question

Your response should not be less than 250 word. If you are getting information from source, e.g. books, internet, you MUST provide the source of information.

In the aftermath of 9/11 and various natural disasters, such as Hurricane Katrina, the attorneys general in several states announced that in order to protect the public interest they would strictly enforce anti-price gouging legislation. Whereas the specific details of such legislation vary across the states, in most cases it prohibits price increases of a certain percentage following the disaster in question. Discuss the pros and cons of “anti-price-gouging” legislation in terms of its effect on the consumer welfare. Specifically, are the attorneys general unequivocally protecting the public interest in their enforcement of anti-price gouging legislation?

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On the face of it, price gouging seems wrong. Raising prices for ice, water, gasoline or other essential goods when people need them most seems exploitative. However, when we take a closer look we can see the advantages of such price hikes.
Demand for some items, such as ice, increases after disasters. With power outages people need ice to preserve the food they have in their...

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