IDEAS home Printed from https://ideas.repec.org/p/fme/wpaper/104.html
   My bibliography  Save this paper

A price theory of price gouging

Author

Listed:
  • Scott Duke Kominers

    (Harvard Business School Harvard University
    Harvard Business Becker Friedman Institute for Research in Economics University of Chicago
    Department of Economics Harvard University)

  • Piotr Dworczak

    (Northwestern University
    Group for Research in Applied Economics (GRAPE))

Abstract

We propose an economic definition of price gouging: Price gouging occurs in a competitive market when lowering the price from the market-clearing level would increase total Utilitarian welfare. We then use price-theoretic tools to characterize determinants of price gouging in a setting with income heterogeneity and non-quasi-linear preferences that induce a motive to redistribute across agents. The circumstances under which price gouging occurs in our framework align with the contexts covered by existing anti‒price gouging laws. By proposing a definition of price gouging that does not appeal to any non-economic notions of (un)fairness or excess, we hope to provide a pathway for follow-up theoretical and empirical research.

Suggested Citation

  • Scott Duke Kominers & Piotr Dworczak, 2025. "A price theory of price gouging," GRAPE Working Papers 104, GRAPE Group for Research in Applied Economics.
    • Handle: RePEc:fme:wpaper:104
    as

    Download full text from publisher

    File URL: https://grape.org.pl/WP/104_Kominers_website.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Julio J. Elias & Nicola Lacetera & Mario Macis, 2022. "Is the Price Right? The Role of Economic Tradeoffs in Explaining Reactions to Price Surges," NBER Working Papers 29963, National Bureau of Economic Research, Inc.
    2. R. Chakraborti & G. Roberts, 2021. "Learning to Hoard: The Effects of Preexisting and Surprise Price-Gouging Regulation During the COVID-19 Pandemic," Journal of Consumer Policy, Springer, vol. 44(4), pages 507-529, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rik Chakraborti & Gavin Roberts, 2023. "How price-gouging regulation undermined COVID-19 mitigation: county-level evidence of unintended consequences," Public Choice, Springer, vol. 196(1), pages 51-83, July.
    2. Olivia H. Tousignant & Sarah W. Hopkins & Abigail M. Stark & Gary D. Fireman, 2021. "Psychological Wellbeing, Worry, and Resilience-Based Coping during COVID-19 in Relation to Sleep Quality," IJERPH, MDPI, vol. 19(1), pages 1-15, December.
    3. Jordi Brandts & Isabel Busom & Cristina Lopez-Mayan & Judith Panadés, 2024. "Images say more than just words: visual versus text communication to dispel a rent-control misconception," Experimental Economics, Springer;Economic Science Association, vol. 27(2), pages 417-468, April.

    More about this item

    Keywords

    price gouging; price control; market design;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fme:wpaper:104. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jan Hagemejer (email available below). General contact details of provider: https://edirc.repec.org/data/grauwpl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.