Forget Price Gouging: Businesses React Altruistically To Disasters (New at Reason)

With natural disasters in the news, the country is being treated to a real-time debate over the sins of so-called price gouging, or sharp hikes in the cost of food, water, fuel, and other essential items in affected areas.

Defenders of gouging, including many libertarians, stress that price hikes force customers to prioritize their purchases while incentivizing suppliers to bring necessities to market. So if jugs of water are selling at $10 a gallon, businesses have a motivation to truck them in. And at that price, no one's going to use them to wash their cars.

Critics, however, say that it's immoral to use the price mechanism to meter out essentials in a crisis.

Both sides ignore a far more-important reality: Local and national businesses routinely give away goods and services more efficiently than public-sector responders or charities can manage.

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