Emily Miller was fortunate enough to secure $200 floor seats to see Taylor Swift on her Eras Tour in Pittsburgh last summer. She was unable to purchase tickets for the upcoming tour’s US return, resulting in high prices on the resale market. Miller believes resellers are exploiting fans and taking advantage of their vulnerability. The accusation of price gouging is becoming increasingly common, but economists and President Joe Biden do not agree on a specific definition of it.
While inflation has caused a rise in prices across the board, technology allows prices to increase instantly. Consumers often turn to social media to complain about feeling ripped off, but they may actually be victims of inflation or supply and demand, rather than true price gouging. The laws against price gouging are ambiguous and do not provide a clear definition, leaving room for interpretation.
Gavin Roberts, an economics professor, believes price gouging occurs when there is a scarcity of a good or service, lack of competition, and consumers have little information about pricing or alternatives. Steven Suranovic, another economics professor, defines price gouging as using market power to secure higher prices than would occur in a competitive market. He points to examples such as Martin Shkreli’s drastic price increase on a pharmaceutical drug.
Uber’s dynamic pricing model, also known as surge pricing, has come under scrutiny for allowing prices to increase dramatically during high demand periods. Surge pricing has been the subject of accusations of price gouging, but experts argue that it is a result of a competitive market rather than intentional exploitation. Pricing strategy experts warn that surprise price increases can lead to customer backlash and negative perceptions.
To avoid accusations of price gouging, pricing strategy experts recommend setting prices in a way that adds value to the customer’s experience. Consumers who believe they are being price gouged can report the issue to their state attorney general. During the pandemic, many states capped prices on essential goods to prevent price gouging. The lack of a clear definition of price gouging leads to confusion about what constitutes unfair pricing practices. Overall, the debate over price gouging continues as consumers navigate rising costs and potential exploitation in the market.
