Is This Price Gouging?

By  •  Tuesday May 11, 2010 3:20 PM PDT  •  4 Comments

2000 watt camping generators are advertised at Aldi for about $150. That got me thinking about ways to evade price gouging laws in Gulf Coast states. Rather than speculate, I sent the following email to Florida Attorney General Bill McCollum via his website:

Greetings,

This is not a complaint. I hope you can assist me with an example I want to do in the Economics 100 class I teach at Rhodes College. Recently, 2000-watt camping generators have been advertised at a Memphis Aldi for $150. Suppose I purchased their stock of generators at the retail price and then advertised them in Florida newspapers for $1000 each for the next several months. If Florida is hit by a hurricane, I would then mark down the generators to $750 each—a 25% discount compared to my original $1000 per generator asking price. Would I run afoul of Florida’s price gouging laws by offering the generators at a 25% discount relative to my original asking price? Thank you for your time and consideration.

Kindest regards,

Art Carden
Assistant Professor of Economics and Business
Rhodes College
Memphis, TN

Cross-posted at Division of Labour. I’ll blog his office’s response if they will give me permission.

Tags: Economics, Energy, Free Market, Law, Price control, Regulation

4 Comment(s)

  1. Dr. Carden,

    I try this all the time. It never works. You see the state is too smart to be on record (transparent) when it doesn’t absolutely have to be.

    The AG Office’s response will be that it “does not offer legal counsel to private individuals” and that you need to pay the legal profession its extortion fee if you want to know (or, rather, an educated guess) about what the state’s police forces will do to you in a given situation.

    Brent | May 11, 2010 | Reply

  2. Brilliant!!! ;-)

    Speedmaster | May 12, 2010 | Reply

  3. Good try but I have to agree with Brent. I believe in Canada (where I live), the antitrust authority charges for providing advance rulings, i.e., they charge for telling you what the law is.

    david | May 12, 2010 | Reply

  4. Brent is probably right in terms of any direct response.

    But also, answering your question directly would promote clarity, contrary to the stated preference of state officials. For example, from a news story, “State agriculture officials say the statute is written to provide some flexibility so that the agency can determine what is price gouging on a case-by-case basis.”

    See my post, “Florida price gouging laws: too vague or just flexible?” at Knowledge Problem for links.

    Michael Giberson | May 17, 2010 | Reply

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