Saturday, May 19, 2007

"Unconscionably Excessive" Prices? Who Decides

House of Representatives' Federal Price Gouging Prevention Act:

"To protect consumers from price-gouging of gasoline and other fuels, it would be unlawful for any person to sell crude oil, gasoline, natural gas, or petroleum distillates at a price that: a) is unconscionably excessive; or b) indicates the seller is taking unfair advantage of unusual market conditions (whether real or perceived), or the circumstances of an emergency to increase prices unreasonably.”

First question and the biggest problem with legislation like this: What exactly is "unconscionably excessive," and who decides? When is a seller taking "unfair advantage" of a buyer, and who decides?

Maybe lawmakers ought to apply the same restrictions to other products. Some of us might find it “unconscionably excessive” that Starbucks charges the same amount for a 20-ounce cup of coffee that a consumer would pay at a supermarket for an entire can of coffee, one that will make dozens of cups. We might also find it “unconscionably excessive” that the same supermarket charges $1.25 for a bottle of the same water we can get direct from a tap for pennies. Talk about a markup.

From today's editorial by Rich Tucker Driving Up Prices
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2 Comments:

At 5/19/2007 2:30 PM, Anonymous Walt G. said...

The problem is expecting politicians to address problems instead of perceptions. Which do you expect would garner more votes: 1) Explaining the free-market economy to the electorate through 15-second sound bites, or 2) Taking the big bad oil companies to the wood shed? The legislation does not have to be well-defined; it just has to get them reelected.

If the price of Starbuck's coffee was an issue that could result in votes, regulation would not be out of the question.

I don't think we can assume rational choice theory and politics are synonymous events. As the article mentioned, charging someone for something that can usually be obtained for free—water—provides clear evidence of irrational consumer/voter choices.

 
At 5/20/2007 11:09 AM, Blogger juandos said...

Well now isn't it amazing how the taxman (federal & state) is really the one to do the gouging yet no mention of that?

Just how much much money did the taxman invest in bringing oil and refined products to market?

 

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