Understanding Price Gouging

Price gouging involves charging exorbitant prices for essential goods during emergencies, a practice that often leads to public outcry and legal scrutiny. Anti-price gouging laws typically consist of three components: the trigger, which can be a state of emergency; the domain, referring to essential items; and the limit, which defines how much prices can be increased without violating the law. The intent behind these laws is to protect consumers during crises, yet the definition of 'unreasonably excessive' price increases creates ambiguity that can deter businesses from raising prices even when justified. As a result, this ambiguity can lead to a shortage of essential goods as sellers may fear legal repercussions for increasing prices to reflect demand during emergencies.