Should price gouging be illegal? As part of our Philosophy, Politics & Economics (PPE) video series, Professor Michael Munger of Duke University explores this question from an economic perspective. He explains that letting prices rise sharply during a shortage allows three things to happen that help everyone in the long run: 1) rising prices cause consumers to economize, 2) they incentivize producers to make more, and 3) they encourage entrepreneurs to make substitutes, all of which help end the shortages more quickly, getting essentials to the people who need them and allowing prices to naturally come back down. Anti-price gouging laws attempt to help consumers by preventing prices from rising, but these laws can actually cause more suffering by preventing the three things above, thereby extending the shortages: 1) artificially low prices don't give buyers any reason to economize, making them more likely to hoard the product and not leave enough for the next people in line, 2) artificially low prices mean producers have less incentive to make more, and less incentive to move product from other areas to get them to the people who need it, and 3) artificially low prices give less incentive for entrepreneurs to develop substitutes. Dr. Michael Munger is a Professor of Political Science at Duke University, and Director of the PPE Certificate Program.

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This video is part of a series exploring the public policy applications of lessons learned in PPE (Philosophy, Politics, and Economics) courses. The series is called “Markets on the Margin." It's also part of a larger series about foundational lessons in PPE. All videos in the series feature professors who teach in university PPE programs. Watch the rest of the videos in the “Markets on the Margin” playlist here: [ Ссылка ]

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