Price Gouging or Supply and Demand? | Spadea

Price Gouging or Supply and Demand? | Spadea

By Bill Spadea
This post originally appeared at NJ 101.5

We continue to hear the stories about so-called “price gouging” and the hostility exhibited toward the offender, especially from the many so-called journalists in the news media. Of course as with every story there is another side.

A calm analysis of the practice of raising prices in times of emergencies may calm some of your anger. First of all, most of the stories you hear are from smaller businesses who are raising prices based on a flood of new demand due to the increased costs of doing business. Suppliers and wholesalers raising their prices and the need to keep critical supplies in stock all contribute to higher prices.

In dangerous economic times like these, many stores are concerned that they will be overrun by customers and cleaned out leaving shelves empty. Many of those stores will wait for resupply leaving them vulnerable and in a low margin business facing the possibility of layoffs and even closing. Charging more for products to meet a rising demand makes economic sense to many small businesses. They are in it to survive, not ‘gouge’ the customer.

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