Covid-19 ‘price gouging’ could be prevented, says University of Portsmouth law lecturer
‘Price gouging’ is when businesses heavily inflate prices of products that are in high demand.
Some sellers have taken advantage of the global health crisis by increasing their prices in order to profit. As a result, this has had a negative impact on the consumer.
Dr Giosa has recently written a paper on the academic and policy debate about excessive pricing due to Covid-19. She said: ‘Inflating the prices of essential items is unfair and exploitative during a global crisis. Some sellers have raised prices on items that are needed for safety, which is shocking.’
Dr Giosa’s work also explores the provision of EU competition law, which the National Competition Authorities (NCAs) and the European Commission could enforce against excessive pricing.
Additionally, her work investigates the topic surrounding EU Member States, and whether they should rely on price regulations to cap the wholesale and retail prices of some high-demand products due to the coronavirus pandemic.
The argument that Dr Giosa proposes is that imposing fines on these companies that are charging extra is not an appropriate solution due to the fact that there is no guarantee that the prices will increase in the future.
On the other hand, it could be very expensive for the NCAs to monitor the effectiveness of the fines resetting the prices to a ‘non-excessive’ level. Her article also discusses the application of price controls.
The free formation of prices does not always guarantee socially desirable outcomes. In the case of Covid-19, face masks are an explicit example.
While in the long run high prices should boost their supply, in the short run there may be problems, like health workers in heavily-affected countries being outbid by fearful private individuals in other countries who have a low risk of infection but high incomes.
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