OGDEN, Utah – Research compiled at the Weber State University School of Business looks at the impact anti-price gouging laws have on the supply of goods during an emergency.
The research collected data from Google searches of questions like “where can I buy toilet paper” and “where can I buy hand sanitizer.”
Those questions were searched more in the 36 states with laws preventing price gouging than in states without the legislation.
Researchers deduced this phenomenon occurred because consumers in those 36 states could not find those products in stores.
Keeping prices low during an emergency like the COVID-19 pandemic encouraged people to buy more goods, leading to empty store shelves.
To illustrate how higher prices would have kept stores stocked, Gavin Roberts, a professor of economics at Weber State University, used a natural disaster as an example.
“If you allowed those gas prices to increase, then more people would be trying to supply gas to Louisiana because they could make more money, because it’s a higher price,” Roberts said. “At the same time, if you have a higher gas price, people will try to consume less gas.”
The Utah State Code prohibits price gouging and imposes a fine of up to $1,000 for each violation.
Roberts says this research isn’t intended to push lawmakers to eliminate anti-price gouging laws, but rather, illustrate some unintended consequences.
“The cost of the regulation is the shortage,” Roberts said. “That’s a cost. A real cost.”