Are Pandemic Sellers Actually Violating Price-Gouging Laws?

As COVID-19 spreads throughout the country, it is especially important unscrupulous sellers do not take advantage of Americans by selling products at unconscionable prices. Price gouging occurs when a supplier of a product or service charges “excessive” prices—taking advantage of an emergency situation—to acquire “unconscionable” profits. Economic analysis provides a framework to empirically test whether prices being charged by sellers for goods or services rise to the level that constitute price gouging as defined by state law.

The key question in conducting an economic analysis hinges on how to rigorously define “excessive” prices and distinguish between “reasonable” and “unconscionable” profits. Not surprisingly, the breadth and variety of state and local laws create a wide range of “definitions” of what behavior constitutes price gouging.

In this article, published in Law360, Edgeworth Partners Dr. John H. Johnson, Dr. George Korenko, and Matthew Milner describe various concepts used when identifying appropriate benchmarks and comparators in an assessment of price gouging. Throughout, they highlight examples of how key differences in state and local statutes would affect the relevant economic analysis.

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