Most economists disagree with a new bill in the US that would set limits on “unconscionably excessive prices,” according to a recent survey from the Initiative on Global Markets.
Last month, the House of Representatives approved a Democrat-backed bill that would give the President the ability to make price increases on gasoline illegal by declaring an energy state of emergency.
The bill has not yet been approved by the Senate, and if most economists have their way, it would not pass in the 50-50 legislative body.
As Eric Maskin of Harvard said in response to the IGM survey, “At a time of shortage, high prices can serve to stimulate an increase in supply.”
However, some economists agree in principle with a law against price gouging, but worry about lawmakers’ ability to define the circumstances that would require it, the companies it would apply to and the levels that constitute “unreasonable.”
“Confident that I don’t know, nor what ‘unconscionable’ means. Sympathetic to aims though,” said Angus Deaton of Princeton.
Darrell Duffie was in the minority that agreed, saying “morally there should be a limit to markups after a tragedy.” He added that the definitions must be specific.