« Useful Micro | Main | Political Charity» Russell Roberts
September 22, 2005
A Fair Price
Russell Roberts
The topic of gouging continues to occupy conversation and the news. My gas station's price, btw, is down 39 cents from the peak two or so weeks ago. One theme I keep hearing is that it's one thing to charge more than you paid for something—that's OK, that's a profit. Gouging is when you charge a lot more. By what right (asks the critic) can a gas station owner or the oil company charge so much more?
Right has nothing to do with it. It's an interesting thought. We can allow prices to rise "a lot" or we can't. But before we take away that "right" we ought to remember one thing.
The reason the price goes up is because without the price rise, there isn't enough gasoline to go around. If you decry gouging, you are asking for gas stations to run out of gas at unknown times of the day, ruining people's plans to get to work, go to the hospital, take a pleasure ride. You are asking for lines to form that make it hard to plan those trips.
Suppose you show up at your regular gas station tomorrow and find the price is $10 a gallon. What's going on, you ask. "My daughter's getting married in a month. I didn't realize how much it was going to cost. I need to make more money this week." Does the owner have the right to charge $10? Sure, and you have the right to shop elsewhere, which you will unless you feel really sorry for him or know him well.
Suppose you show up at your regular gas station tomorrow and find the price is $10 a gallon. What's going on, you ask. "I made a bad deal with my wholesaler. I overpaid. To cover my costs, I need $10 a gallon." Does the owner have the right to charge $10? Sure, and you have the right to shop elsewhere, which you will unless you feel really sorry for him or know him well.
Suppose you show up at your regular gas station tomorrow and find the price is $10 a gallon. What's going on, you ask. "I know it's a lot. But I bought the gas two weeks ago when it was really expensive. I know it's cheaper now and everyone else is charging less, but I need to cover my costs." Does the owner have the right to charge $10? Sure, and you have the right to shop elsewhere, which you will unless you feel really sorry for him or know him well. (HT to Zev Fredman for pointing out this example.)
What you pay for something does not determine what you can sell it for. This is the reality in a market-based economy. There might be times as buyers that we wish it were otherwise. There might be times as sellers that we wish it were otherwise. But that is the reality. We can change that reality, of course, with regulations. But we can't change it one piece at a time, such as leaving everything else the same, except for the price. That option is not available.
Posted by Russell Roberts in Prices, Reality Is Not Optional | Permalink
TrackBack
TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d834518ccc69e200d83425126653ef
Listed below are links to weblogs that reference A Fair Price:
» So when is it gouging? from larry borsato
Russ at Cafe Hayek has a good post that explains that gas station owners and oil companies can raise prices because we have the right to shop elsewhere. He also suggests that it isn't gouging because it helps to maintain... [Read More]
Tracked on Sep 22, 2005 7:16:19 PM
» Russ is wrong on rights from Dull Geek
I don't know squat about economics. Especially not in comparison to someone like Russ Roberts, who's an econ professor at GMU. But I think he got this wrong in his latest entry on gouging [Read More]
Tracked on Sep 22, 2005 9:26:35 PM
» Stop Price Dumping from Neolibertarian
Attention! Irresponsible consumers may be buying products for way under value!
We need to establish all sorts of government jobs and oversight agencies to make sure consumers aren't paying too little for products, taking advantage of vuln... [Read More]
Tracked on Sep 22, 2005 9:51:07 PM
» MP3 File Search from The Mp3Database
Download mp3 audio music and song lyrics. Mp3 search engine to music links for free download ... Quick Database Search search in 250209 mp3 entries ...
[Read More]
Tracked on Mar 26, 2006 1:34:34 AM
» Fishy Debate: Groups Argue Over Salmon's Benefit to Pregnant Moms from dvertising Campaign
dvertising Campaign Sets Off Latest Dispute [Read More]
Tracked on Apr 2, 2006 5:40:24 PM
» MP3 Downloads, Full Albums, Latest Hits, MP3 Search from Global Media Search Engine
Big Mp3 Archive, Mp3 Search, Mp3 Albums, Mp3 Songs, Mp3 Software, Mp3 Traffic Exchange, Advertising... [Read More]
Tracked on Apr 5, 2006 2:44:18 AM
» Cell Phones from mobilebum.info
News and ... Sep News of Safety phones, new cell phone phones Cell time ... [Read More]
Tracked on Apr 8, 2006 1:54:50 AM
» Drugs & Supplements from Drug Information and Supplement Information
Search: Enter a drug name ... LEGAL CONDITIONS AND TERMS OF USE APPLICABLE TO ALL USERS OF THIS SITE. ANY USE OF THIS SITE CONSTITUTES YOUR AGREEMENT TO ... [Read More]
Tracked on Apr 13, 2006 7:26:24 PM
» Free & Open Source Software Portal: Search from An Online Directory
Popular links · Discussion Forum. Directory Search. By Keyword. Advanced Search. Directory New Links. New links added this week. links in Portal... [Read More]
Tracked on Apr 27, 2006 12:02:22 AM
» Auto Search: 1939 pontiac parts9 from Online Auto Guise
Search and Compare Certified Pre-Owned Cars. Car Shopping Tools and Advice · 2006 Auto Shows · New York Auto Show Check out 2007 models and cool concepts ... [Read More]
Tracked on Apr 27, 2006 9:22:01 AM
» Library of Congress WWW/Z39.50 Gateway from Harvard Seismology: Centroid Moment Tensor Catalog
Contents: Search Library of Congress Catalog | Search Other Catalogs | About the Z39.50 ... Library of Congress Online Catalog. Simple Search (any keyword) ... [Read More]
Tracked on Apr 29, 2006 4:49:17 PM
» The Interactive NGC Catalog Online from Official Catalog
The Interactive NGC Catalog Online. This is the interactive NGC (and IC, and Messier) catalog at SEDS, based on the famous NGC 2000.0 by RW Sinnott of Sky ... [Read More]
Tracked on Apr 30, 2006 12:13:21 AM
» SmartPhone Today: Toshiba 2032 from Smartphone Reviews; Best SmartPhones
The Internet's 3rd Party information center for SmartPhone Shareware, SmartPhone Freeware, Reviews, Hardware, Discussion, and more! Updated Daily... [Read More]
Tracked on Apr 30, 2006 4:09:09 AM
» Find search engines across the world with Search Engine from World Search
Gain quick, efficient access to search engines from countries around the world with Search Engine Colossus - International Directory of Search Engines. [Read More]
Tracked on May 7, 2006 1:14:46 AM
» Job Search from Directory with Free People Search
Perform a quick job search using Job Bank USA's powerful job search engine. ... Thank you for using Job Bank USA's employment search services and job search ...
[Read More]
Tracked on May 7, 2006 3:54:31 PM
» USA Search Engine Optimization from Advanced Search | US
Directory of USA (USA) search engine optimization (seo) and marketing professionals for web sites, internet development and viral marketing campaigns. [Read More]
Tracked on May 7, 2006 4:10:10 PM
» Jewelry Shop from Jewelry making, Tips from The Jeweler's bench - Jewelry making
The Gem and Jewelry World's foremost Resource on The Internet. ... The Jeweler's Selected Bibliography. Add Ganoksin Power Search to your website ...
[Read More]
Tracked on May 19, 2006 8:16:28 PM
» End Of The Road For Hummer H1 from last for the
attracted celebrities and off-road enthusiasts but has drawn the ire of environmentalists. [Read More]
Tracked on May 21, 2006 12:20:06 PM
» ABC Office Announces Addition of Formax Paper Shredders from new partnership
Formax and the addition of eight new shredders. (PRWEB May 15, 2006)
[Read More]
Tracked on May 24, 2006 12:59:07 AM
» Search in Directory: huns yellowpages from Directory Map
Directory of hundreds of search engines, organised by country and topic. [Read More]
Tracked on May 24, 2006 9:04:50 AM
» NYC Sues 15 Gun Shops in 5 States
(AP)
from of the guns that
portion of the guns that flow into New York, including some that end up in the hands of criminals. [Read More]
Tracked on May 27, 2006 7:56:59 PM
» U.S. Troops in Iraq to Get Ethics Training from Troops in Iraq
Troops in Iraq to Get Ethics Training in Wake of Civilian Deaths in Haditha [Read More]
Tracked on Jun 6, 2006 10:08:29 AM
» Internal Audit: Resources for Internal Auditors from Audit Company
Internal Audit - is the Web portal and online community for the internal audit profession provides free audit work programs, ICQ's, checklists, ...
[Read More]
Tracked on Jun 6, 2006 8:06:51 PM
» fast thc marijuana detox kit for people under 200 lbs from Detox process
The good news is that the detox process may enhance your body's ability to metabolize the medication and you may soon require less. But in the meantime, ...
[Read More]
Tracked on Jun 9, 2006 8:44:18 AM
» Riley Wouldn't Give Up Wade for Shaq from was fair,' said
the Heat president and coach, of the July 2004 trade that sent Lamar Odom, Caron Butler and Brian Grant to the Lakers. [Read More]
Tracked on Jun 12, 2006 5:46:05 AM
» Bold Moves Have Riley Looking Slick Again from so perhaps he
pro coach for whom he's ever played. O'Neal's unsolicited personal ranking may or may [Read More]
Tracked on Jun 17, 2006 1:21:14 AM
» States and Capitals from All USA States
State information resource links to state homepage, symbols, flags, maps, constitutions, ... All Rights Reserved. Press Ctrl - D to bookmark this page. ... [Read More]
Tracked on Jul 18, 2006 12:41:38 AM
» USA towns: Wheeling from USA MAP
USA - cities, towns and villages of the United States. Extensive business listings, community info, coupons and classified ads for USA cities, ... [Read More]
Tracked on Jul 22, 2006 10:40:56 AM
» bloodless surgery from Medicine Words
Medicine Dictionaries and Word References Emergency Medical Technology ...
[Read More]
Tracked on Jul 25, 2006 12:16:22 AM
» ALL Themes from Invision Power Board
He has set up a test blog so you can check it out - it’s great work. ... Note to all theme authors: In order to be considered for the competition, ... [Read More]
Tracked on Jul 25, 2006 1:50:55 PM
» Bvlgari from Bvlgari Watches
Great Saving On Bvlgari Watches Bulgari Watch Bvlgari Assioma, Bulgari Zero1, Bulgari Watch Tubagas, Bvlgari Diagono Aluminium, ...
[Read More]
Tracked on Aug 9, 2006 8:06:03 PM
» Mexico left hits ministry, roads in vote protests from of Mexican leftists
and threw open highway toll gates on Tuesday in an escalation of protests against alleged fraud in last month's presidential [Read More]
Tracked on Aug 14, 2006 8:48:10 PM
