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  • Writer's pictureMichael Hunter

Google on Price Gouging: "We'll Know It When We See It"?

There's no such thing as price gouging. I'll explain, using the type of example I believe Google is alluding to with their new policy.

Our natural reaction is to be appalled when we hear, amid a natural disaster like a hurricane / power black-out, about critical supplies like power generators or bottled water being sold for 2x, 3x, even 5x their regular price (usually by 3rd parties, as retailers will keep their list prices intact until out-of-stock, oftentimes limiting sales to one per customer). 

But it's the higher prices that send immediate, critical market signals to those in unaffected regions to send their excess supplies to the disaster zone (and to manufacturers to produce more), and increased supply is what drives prices down. 

In prohibiting "artificially inflating prices," Google would be artificially deflating them, which invariably will lead to someone hoarding the available supply at lower prices and selling them from the back of his pick-up truck for cash at whatever higher prices the market will bear. Without additional supply coming to the rescue, prices stay high, thereby hurting the people who need the most help.

Meanwhile, the higher prices were acceptable enough to all buyers; otherwise, they would’ve foregone the purchase.

Without providing any definition or parameters of price gouging, Google comes across here like the Supreme Court judge in 1964 who couldn’t articulate his threshold test for obscenity in a film but assured the court that “I know it when I see it.” They also play the role of virtue-signaler, an intrepid crusader battling the evil price gougers.

Google should instead stick to its primary role of conveying information – which helps both sellers and buyers – and let the free market work its magic.

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