The cost of a thing is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run.
The incredible, edible egg.
Fires in California, hurricanes along the Gulf, a worldwide pandemic—it is evident that the year 2020 was defined by great crises, most of which were direct results of or exacerbated by climate change. The effects of these crises on broader American society, in particular that of the COVID-19 pandemic, are just beginning to be realized. Nearly every aspect of American life has been impacted by the pandemic and by the corresponding responses of state and federal governments.
Rapid price increases are a common thread linking environmental catastrophes of various causes. Environmental catastrophes, like hurricanes, droughts, and pandemics, all can create scarcity, causing prices to rise. Depending on the magnitude, these price increases may be characterized as “price gouging.” Price gouging as a practice, and crisis price increases more broadly, can take many forms, have varying causes, and are not infrequently the subject of litigation and academic controversy.
The 2020 pandemic-induced price increases were unique in their sheer breadth: commodities from thermometers to toilet paper experienced nationwide price shocks, due to increased demand, challenges to supply chains, or both. The strain that the pandemic placed on the food supply was particularly unprecedented. Animal protein markets experienced never-before-seen challenges to their supply chains, while simultaneously dealing with skyrocketing demand. Of these commodities, the egg market experienced the most dramatic shift in price, with a consumer price index increase of 16.1% in April. The next highest increase was 4.3%, for the commodity category of meat, poultry, and fish.
These commodity prices eventually leveled out, and by July even egg prices had returned to relative stability. Even so, four state attorneys general brought actions against egg suppliers for price gouging through the spring and summer of 2020. In addition, calls for federal price gouging legislation have been renewed along bipartisan lines, despite overwhelming distaste among neoclassical economists for the kind of price ceilings these laws create.
Traditional economic critiques, however, have largely ignored the broader ethical, political, and moral concerns of politicians and voters that keep restrictions on price gouging popular. These concerns ensure that anti-price gouging laws are an indefinite fixture in American law. Litigation under anti-price gouging laws, however, is not the only option that federal and state governments have to prevent or mitigate crisis price increases.
This Note uses the egg market as a case study to present four policy alternatives that state and federal governments may consider in addressing crisis price increases, rather than resorting to anti-price gouging litigation. Part I narrows the scope of discussion and defines price gouging, a term that can be emotionally charged. Part II tells the story of the 2020 egg market, which is both an intrinsically valuable case study and a useful model to frame policy alternatives. Part III examines the theoretical underpinnings of price gouging to develop a dichotomous framework with which to evaluate policy alternatives. Part IV presents and analyzes the four policy alternatives using this framework. The goal of this Note is to describe and analyze alternatives to litigation that will better resolve the concerns that anti-price gouging laws attempt to address.