After Natural Disasters Such as Hurricanes, the Prices of Necessity

Essay

After natural disasters such as hurricanes, the prices of necessity goods such as bottled water, generators, milk, and so forth, in the areas hit by the hurricane tend to increase dramatically. Many consumers and politicians have termed these increases "price gouging," as they insinuate that suppliers are taking advantage of consumers when they are most vulnerable. Governments have even gone so far as to make price gouging illegal, saying in many places that it is illegal to charge any price significantly higher than "pre-hurricane prices." From an economic standpoint, are these laws that prohibit price gouging efficient? What would happen if these laws were repealed and prices were allowed to increase?