A Stitch in Haste

Here is a quick cheat-sheet on price gouging laws courtesy of the Congressional Research Service:

At least 13 states — Alabama, Arkansas, Florida, Georgia, Indiana, Louisiana, Mississippi, New York, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia — have laws that specifically address price gouging in the event of a declared emergency. Other states may exercise authority under general deceptive trade practice laws depending on the nature of the state law and the specific circumstances under which price increases occur.

Note that all four states affected by Katrina are on that list.

Other hasty stitches:

--Changes in price are often defined over a 30-day window.

--Most of the laws focus only on demand-driven panics, such as the great "Johnny Carson Toilet Paper Scare" of December 19, 1973. Bona fide supply shocks that drive up prices but not profit margins are exempt from the laws.

--"Declared emergency" can in some states be a fungible term that does not require a natural disaster. It is usually up to the governor of the state to actually declare the "emergency."

--There is of course no federal price gouging law, but the report points out that antitrust law can apply if collusion is found, and reminds us of Richard Nixon's implementation of price controls under the Economic Stabilization Act of 1970. Other federal laws also apply specifically to oil- and energy-related "crises."

More thoughts at Coyote Blog.