Can prohibitions on “price gouging” reduce deadweight losses?
The vast literature on price controls says little about the way laws against “price gouging” differ from generic price ceilings, yet there is an important difference. By creating the foreseeable possibility (not certainty) of a shortage, a prohibition on price gouging may cause rational consumers to increase consumption. This has particularly interesting implications for markets with external benefits – expectations about policy-induced shortages may increase socially beneficial preparedness for times of acute scarcity (e.g., obtaining vaccinations prior to epidemics, keeping goods on hand in preparation for natural disasters). Thus, under some conditions, laws against price gouging may increase total surplus.
Volume (Year): 37 (2014)
Issue (Month): C ()
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/irle|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Edward L. Glaeser & Erzo F. P. Luttmer, 2003.
"The Misallocation of Housing Under Rent Control,"
American Economic Review,
American Economic Association, vol. 93(4), pages 1027-1046, September.
- Lee, Dwight R, 1978. "Price Controls, Binding Constraints, and Intertemporal Economic Decision Making," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 293-301, April.
- Deacon, Robert T & Sonstelie, Jon, 1985. "Rationing by Waiting and the Value of Time: Results from a Natural Experiment," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 627-47, August.
- Christopher J. Flinn, 2006. "Minimum Wage Effects on Labor Market Outcomes under Search, Matching, and Endogenous Contact Rates," Econometrica, Econometric Society, vol. 74(4), pages 1013-1062, 07.
- Richard Arnott, 1995. "Time for Revisionism on Rent Control?," Journal of Economic Perspectives, American Economic Association, vol. 9(1), pages 99-120, Winter.
- Justin P. Johnson & David P. Myatt, 2006.
"On the Simple Economics of Advertising, Marketing, and Product Design,"
American Economic Review,
American Economic Association, vol. 96(3), pages 756-784, June.
- David P. Myatt & Justin P. Johnson, 2004. "On the Simple Economics of Advertising, Marketing, and Product Design," Economics Series Working Papers 185, University of Oxford, Department of Economics.
- Deacon, Robert T & Sonstelie, Jon, 1989. "The Welfare Costs of Rationing by Waiting," Economic Inquiry, Western Economic Association International, vol. 27(2), pages 179-96, April.
- Villas-Boas, Sofia B & Dejanvry, Alain & Sadoulet, Elisabeth, 2010.
"Short on Shots: Are Calls on Cooperative Restraint Effective in Managing a Flu Vaccines Shortage?,"
Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series
qt09q664sc, Department of Agricultural & Resource Economics, UC Berkeley.
- de Janvry, Alain & Sadoulet, Elisabeth & Villas-Boas, Sofia, 2010. "Short on shots: Are calls for cooperative restraint effective in managing a flu vaccines shortage?," Journal of Economic Behavior & Organization, Elsevier, vol. 76(2), pages 209-224, November.
- Drazen, Allan, 1986. "Optimal Minimum Wage Legislation," Economic Journal, Royal Economic Society, vol. 96(383), pages 774-84, September.
- Deacon, Robert T & Sonstelie, Jon, 1991. "Price Controls and Rent Dissipation with Endogenous Transaction Costs," American Economic Review, American Economic Association, vol. 81(5), pages 1361-73, December.
- David Card & Alan B. Krueger, 1993.
"Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania,"
NBER Working Papers
4509, National Bureau of Economic Research, Inc.
- Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-93, September.
- Chang Yang-Ming & Sanders Shane D., 2010. "The Welfare Implications of Rent Control: A Rent-Seeking Contest Approach," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-20, October.
- Barzel, Yoram, 1974. "A Theory of Rationing by Waiting," Journal of Law and Economics, University of Chicago Press, vol. 17(1), pages 73-95, April.
- Becker, Gary S, 1976. "Toward a More General Theory of Regulation: Comment," Journal of Law and Economics, University of Chicago Press, vol. 19(2), pages 245-48, August.
- H. E. Frech III & William C. Lee, 1987. "The Welfare Cost of Rationing-By-Queuing Across Markets: Theory and Estimates from the U. S. Gasoline Crises," The Quarterly Journal of Economics, Oxford University Press, vol. 102(1), pages 97-108.
- Lang, Kevin, 1987. "Pareto Improving Minimum Wage Laws," Economic Inquiry, Western Economic Association International, vol. 25(1), pages 145-58, January.
- Brito, Dagobert L. & Sheshinski, Eytan & Intriligator, Michael D., 1991. "Externalities and compulsary vaccinations," Journal of Public Economics, Elsevier, vol. 45(1), pages 69-90, June.
- Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
- Suen, Wing, 1989. "Rationing and Rent Dissipation in the Presence of Heterogeneous Individuals," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1384-94, December.
When requesting a correction, please mention this item's handle: RePEc:eee:irlaec:v:37:y:2014:i:c:p:100-107. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If references are entirely missing, you can add them using this form.