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Which Is Worse?

Notice to long-time readers:

You’ve already heard this spiel from me before.  It’s the one about how price “gouging” is the best way to distribute resources during an extreme but temporary shortage.  This is for the benefit of the 100 or so regular readers I picked up since the porta-potty thing.  You can go on at this point to the next web site you hit every morning.

OK new guys, here we go.

The other day an Econo Lodge in Egg Harbor Township paid a $65,000 fine to settle price gouging charges lodged against it.  This is because after the storm they raised their room prices from $80 to $200.  While they didn’t do it out of the goodness of their hearts, the change did help distribute a scarce resource in an orderly manner to the people who needed it most.

Lets say a big storm is coming and you have to evacuate your house for a week or so.  Your wife suggests you go to her parents’ house, 75 miles away.  Well you don’t feel like taking that long drive in all that traffic and you certainly don’t relish the idea of spending a week with your in-laws.  So you tell her you don’t really want to drive so far (you leave out the part about not liking your in-laws) and you call Econo Lodge.  To you, it’s worth $80 a night to avoid both the drive and Mom and Pop.

But Econo Lodge tells you that the rooms are not $80 but they are now $200.  You say the hell with that.  You might not want to go to your in-laws but it’s not worth spending $1400 or more over it.  (Anyway it would cause a big fight with your wife.)  So you go to the in-laws.


You see, they had somewhere they could go.  By staying with family, they freed up that room to be used by someone who maybe doesn’t have family within driving distance or maybe is a critical worker and needs to stay close to his job.  Plus all the guys that come from other states to get the power back up need someplace nearby to stay.  For those folks, $200 a night at Econo Lodge is better than any other option.

But if the first guy had taken the room at $80, that room would not have been available.

I suppose we could force the motel owner to keep the price at $80 (which, by the way, is a violation of the contract rights of both the motel owner and the person who wants the room at $200) and then station a cop outside to make sure every guest really needed the room and wasn’t just trying to avoid seeing his in-laws. But is that better?


One Comment

  1. Deep Throat wrote:

    Perhaps we can just totally go Commie and if a family of three was occupying a room for four in the Econo lodge, the Govt. could assign another person to the room. On a side note, Some peoples idea of free market is just getting free stuff.

    Friday, August 22, 2014 at 10:35 am | Permalink

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