Would Kamala Harris’s price gouging plan really help US consumers?

Moreover, economists are generally wary of government interference in prices set by businesses, even in times of crisis.

A common example used by critics is the case of a severe snowstorm in which local demand for new shovels shoots up and a local retailer increases prices in response.

The logic is that while such price hikes might seem unfair – and polling shows they are extremely unpopular, external – the higher prices induce other retailers to order more snow shovels from suppliers. This increases the supply and brings the price down again naturally, while ensuring as many people as possible get access to the shovels they need.

A study from 2007 suggested that if a federal price gouging law had been in place on gasoline sales after hurricanes Katrina and Rita in 2005, the economic damage would have been greater because of the discouragement for producers to increase their supply. The authors estimated that the overall economic damage would have increased by $1.5-3bn.

Economists generally prefer governments to focus their efforts to tackle price gouging, to the extent that it exists, through breaking up corporate monopolies and oligopolies (small groups of dominant sellers in a given market) and creating more free market competition, rather than directly controlling prices.

“Price gouging’s not the right way to think about it but price competition is and anything the government can do to facilitate that competition [I’m] all for it”, says Mark Zandi, the chief economist of Moody’s Analytics.