It’s counterintuitive but axiomatic that to make goods cheap and dependably available, businesses must be allowed to charge the highest possible price for their goods and services. This automatically does three things.
First, it entices greater supply by attracting competitors in surrounding areas to shift their inventory into the high-demand area. When price gouging is legal, it creates an extremely lucrative entrepreneurial opportunity for suppliers to anticipate shortages before the first raindrop falls. Load some chainsaws and powdered milk into your truck in Kansas City, and you might just make a small fortune bringing essential supplies into Charlotte.
Second, it automatically rations the remaining stock until more can arrive. Sure, $10 might seem like too much to pay for a gallon of milk. But at least there’s milk to be had. Have you ever tried to buy milk and bread in advance of a blizzard? Legal price gouging minimizes interruptions in supply that can stoke the kind of desperation that leads to looting and lawlessness.
Join the conversation as a VIP Member