Florida is preparing for Hurricane Dorian, which is predicted to be a Category 4 when it makes landfall on Monday.
On Wednesday, Gov. Ron DeSantis (R) has declared a state of emergency for several counties in the hurricane’s path. According to Florida Statute, Section 501.160, it is against the law for a business to sell an essential commodity for an amount that “grossly exceeds the average price at which the same or similar commodity was readily obtainable in the trade area during the 30 days” during a declared state of emergency.
As of this weekend, Florida Attorney General Ashley Moody has activated the state’s price gouging hotline. If a business is caught charging significantly elevated prices for goods, it could face a civil fine of $1,000 per violation.
But sky-high prices can be vital information to suppliers and customers who are facing a natural disaster. “Prices are not just money. They are information,” John Stossel explained in 2018. “They are what signal entrepreneurs to go into a given business. Rising prices are the clearest indicator of what most customers want.”
Jerry Taylor and Peter Van Doren argued something similar in a 2003 commentary piece for the Cato Institute:
Gougers are sending an important signal to market actors that something is scarce and that profits are available to those who produce or sell that something. Gouging thus sets off an economic chain reaction that ultimately remedies the shortages that led to the gouging in the first place. Without such signals, we’d never know how to efficiently invest our resources.
High prices also help prevent a handful of consumers from hoarding the majority of supplies.
“A husband and father who doesn’t know how long his town will be without gasoline or drinking water might be inclined to buy as much as he can haul away. If several people do that, supplies run out quickly,” A. Barton Hinkle wrote in 2017. “This is the market’s extremely efficient way of rationing scarce goods.”
“Price gouging—like spinach—may be unappealing at first bite,” write Taylor and Van Doren, “but it’s good for everyone in the long run.”
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