Targeted Anti-Price Gouging Laws Can Combat Market Exploitation Without Harmful Price Controls
Source: https://www.nytimes.com/by/tim-wu. "Opinion | There’s a Better Way to Stop Price Gouging - The New York Times." February 17, 2026. www.nytimes.com
The Gist
Companies are increasingly ripping off customers who have no other choice, like charging $8 for water at airports. Instead of controlling all prices (which doesn't work), the government should target these specific rip-off situations and require businesses to charge similar prices to what they charge in competitive markets.
Conclusion
Governments should implement targeted anti-price gouging laws that focus on captive consumer situations and use competitive market benchmarks rather than broad price controls
Premises
- Price gouging is a real and growing problem where companies exploit situational market power to extract excessive profits from consumers with limited alternatives
- Traditional broad price controls have proven economically harmful, as demonstrated by Nixon's failed 1970s price commission which disrupted supply chains and worsened inflation
- A middle path exists between harmful price controls and ineffective laissez-faire approaches by targeting specific situations where consumers are captive
- Benchmark pricing using competitive market rates as reference points can identify unconscionable price disparities without government price-setting
- This targeted approach has been successfully tested at airports in Salt Lake City and Portland, where retailers must match their city prices
- Modern information technology enables both better price gouging by companies and better enforcement capabilities for government agencies
- The policy should focus on essential goods rather than luxury items and allow businesses to justify higher costs when legitimate
Assumptions
- Market failures in captive consumer situations are predictable and identifiable
- Government has legitimate authority to intervene when markets fail to provide meaningful competition
- Competitive market prices serve as reliable benchmarks for fair pricing
- Technology can be effectively used for enforcement without creating excessive regulatory burden
- Businesses will respond to enforcement by focusing on innovation rather than extraction strategies