Why do some people charge ridiculous prices for water during Hurricane Harvey? Why do others re-sell concert tickets at ludicrous prices? Are they just awful individuals looking to make a quick buck at the expense of others?
In today’s episode, we look beyond surface morality to analyse price gouging as it happens in Hurricane Harvey and the fundamental economic function that it serves. Further, we look into the localized case of Singapore’s Michelin Star Hawker Stalls to witness the effects absent any price gouging. Lastly, we discuss price gouging with regard to concert tickets, and why it is uniquely problematic when finding a solution.
Throughout the episode, you will learn:
- How supply and demand determine price, the price adjustment mechanism, and how price relays information back to consumers and producers
- Why water prices rose during Hurricane Harvey, and how price gougers were essential in bringing key supplies to market
- The effect of state intervention on normal market operations through a price freeze or mandated charity
- The concept of deadweight loss, and how it affects both consumers and producers
- How concepts of price adjustment and deadweight loss apply to Singapore’s Michelin Star Hawker Stalls
- Why ticket gougers exist, and how the concert ticket market provides unique challenges to stop price gouging
Photo Credit: Ken Klippenstein / GritPost.com