Abstract
This study analyzes gasoline prices in Florida and Georgia before and after Hurricane Irma, a major weather event that affected both states in 2017. The analysis reveals that gasoline prices in both states increased and stabilized well in advance of state of emergency declarations that triggered the states’ price gouging laws. Price gouging laws thus appear to be inconsequential. Free market forces determine prices unhindered by government price controls during hurricane emergencies.
Highlights
P rice gouging laws are temporary government price controls often activated during states of emergency
The research question considered in this study is whether or not free market forces circumvented price gouging laws in Florida and Georgia that were triggered by a major weather event, Hurricane Irma, that dramatically impacted these states in September of 2017
Results from Models (2) and (3) of Table 3 indicate only negligible differences between prices at stations located within one mile of an Interstate 75 (I-75) exit ramp and prices at stations located further than 5 miles from I-75 before and after Hurricane Irma
Summary
P rice gouging laws are temporary government price controls often activated during states of emergency Such laws are presumably intended to protect consumers from being charged unconscionable prices for basic necessities during emergency situations. While perhaps well-intentioned, price gouging laws seem to ignore the fundamental economic conclusion that price controls restrict free market forces from efficiently allocating scarce goods. The research question considered in this study is whether or not free market forces circumvented price gouging laws in Florida and Georgia that were triggered by a major weather event, Hurricane Irma, that dramatically impacted these states in September of 2017. The results of the analysis described suggest that free market forces adjust gasoline prices well in advance of this type of emergency, circumventing the presumed intent of these states’ price gouging laws
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