Emily Miller had managed to score $200 floor seats to see Taylor Swift in concert, but when she tried to purchase tickets for the upcoming tour, she was unsuccessful and faced tickets being resold for thousands of dollars. The issue of price gouging was brought to light, with fans feeling exploited by resellers taking advantage of their vulnerability and high demand for tickets. The term has been used to describe various situations, but there is no clear consensus on its definition, even among economists and President Joe Biden.
One thing that is agreed upon is that prices have increased over the years due to inflation, leading to consumers paying more for goods and services. Technology allows for pricing to change quickly, affecting how consumers perceive price increases. Social media has also played a role in drawing attention to situations where consumers feel they are being ripped off, although it may be due to inflation or supply and demand rather than intentional price gouging.
Experts like Gavin Roberts and Steven Suranovic have differing views on what constitutes price gouging. Roberts believes it occurs when there is scarcity, lack of competition, and limited information for consumers, leading them to be taken advantage of. Suranovic sees it as using market power to secure higher prices, citing examples like Martin Shkreli’s price hikes on pharmaceutical drugs. Roberts’ research suggests that anti-price gouging laws may contribute to shortages of goods like toilet paper.
Uber’s dynamic pricing model, also known as surge pricing, has faced criticism for causing prices to increase during high-demand periods. The companies have received accusations of price gouging in situations like New Year’s Eve in 2011 when ride prices spiked above $100. While surge pricing can be a product of a competitive market, it can lead consumers to believe they are being gouged and spark backlash against businesses.
Pricing strategy experts emphasize the importance of setting prices that offer value to consumers and avoid eliciting negative emotional reactions. Consumers who believe they are being price gouged can report the issue to their state attorney general, who may step in to investigate and potentially cap prices. Overall, the issue of price gouging remains a complex and contentious topic, with various perspectives on what constitutes unfair pricing practices and how they can be addressed to protect consumers.
