February 9, 2021 Reading Time: 3 minutes

We lost a longtime family friend last month. Our trusty can of Lysol, the one that’s helped keep us safe for years amid stomach bugs, flus, and seasonal cruds, breathed its last. Amid the worst of the Covid surge, the timing couldn’t be worse.

Not a problem. We can get another one the next time we go shopping. Except we couldn’t.

After repeated trips to several different stores, I had to face defeat. I live in an area with a shortage of disinfectant spray.

Happily, I was still able to procure some. I went to an online marketplace. There the prices for Lysol were much higher. A $6.99 can was going for $15.50 and up, depending on the seller. Double packs were selling from $25 instead of $12.

I realized that those were the market rates for Lysol during a pandemic. The online marketplace was fully stocked, however, whereas my local stores weren’t, even though their prices were unchanged.

There are other costs than just monetary. My search costs for Lysol turned out to be much higher than I had expected, and were it not for the online marketplace, I’d still be spending time making forays in the hopes of arriving shortly after shelves were restocked.

But how long would I await shipment, and who are these sellers? Fortunately, the online marketplace offers shipping information and seller ratings. I was able to get a new can in three days for $17.94 from a seller boasting all five-star ratings — except from one critic who left the terrible rating of one star and this reason: “This price is outrageous. This is definitely price gouging and should be reported to proper authorities.”

And with that, the critic has just inadvertently pointed out why there’s a shortage of disinfectant spray here. My state of North Carolina has been under an anti–price gouging law since March 2020. People like the critic think it means my local retailer can’t “gouge” me, “exploit” my needs, or take advantage of my desire for Lysol, toilet paper, and other necessities by “overcharging” me for those items. What it really means is that I can’t find what I need when it’s in high demand driven by, in this case, worries over a pandemic.

Usually when the anti–price gouging law is activated, it’s because of widespread storm damage, which makes it difficult and more expensive to ship necessary supplies in. The law ironically makes shortages more likely in two ways: 1) by making it less profitable for suppliers to get necessities here, and 2) by prompting people to rush out and buy up (hoard) more of these necessities than they actually need, on a first-come, first-served basis.

A quick lesson in the economics of pricing: when more people suddenly need a thing (demand), and the normal amount of the thing hasn’t changed (supply), its market price should go up. That price increase tells people they might need to rethink exactly how much of the thing they need (it costs more money). It also tells suppliers they might need to rethink how much of the thing they want to bring in (they can make more money). 

If the price doesn’t change, such as when government forbids it, people and suppliers don’t get those signals. People buy up all that has been supplied, and suddenly there’s a shortage.

When the anti–price gouging law is in effect, being able to buy a necessity here is a matter of timing: being on store premises at or shortly after a shipment arrives. Then you can buy it, and not even at the market price, but at the pre-emergency price enforced by the government. Everyone else is out of luck. 

In this situation, however, shipping hasn’t been disrupted, so even though I was out of luck on store premises, I was in luck online. I was able to have disinfectant spray shipped to me directly at the market price.

The critic might not get it, but I was very happy to be “gouged.” I have the disinfectant spray I need to help keep my family safe. I find this situation far preferable to seeing the “correct” price on an item that’s made perpetually out of stock by a shortsighted law enforced against basic economics.

In that I was in agreement with a five-star reviewer: “Happy to find seller that had the products I needed and then promptly shipped them.”

Jon Sanders

Jon Sanders

Jon Sanders is an economist and the director of the Center for Food, Power, and Life at the John Locke Foundation in Raleigh, North Carolina, where he also serves as research editor. The center focuses on protecting and expanding freedom in the vital areas of agriculture, energy, and the environment.

Follow him on Twitter @jonpsanders

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