Episode 84: Price-Gouging Bans Don’t Make Things Cheaper, They Make Them More Scarce
Words & Numbers
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The Reality of Water Prices
If you pass a law saying you may not sell the water for more than a buck 50, you haven't altered the price in the sense that economists mean the price. What happens is people are out looking for this water and they will spend $20 to get a bottle of water but they'll spend a buck 50 in cash. Black markets emerge almost immediately to capture the difference. It's no accident that every time we look at something like this, what do we find?
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